Insider Trading in Congress: The Need for Regulation

39 Pages Posted: 30 Dec 2008 Last revised: 21 May 2015

See all articles by Matthew James Barbabella

Matthew James Barbabella

Yale University

Daniel J. Cohen

Harvard University

Alex Kardon

Columbia University

Peter Molk

University of Florida Levin College of Law

Date Written: December 20, 2008


Is regulation of Congressional insider trading desirable? We intend to use the STOCK Act (H.R. 682) as a springboard for approaching the need for Congressional insider trading regulation from a slightly more academic perspective. First, we describe the STOCK Act by placing it in recent historical context. Understanding the motivation to reform Congressional ethics that existed earlier this decade is crucial to evaluating the STOCK Act and its prospects for eventual passage by Congress. Second, we review the body of insider trading law that already operates to restrain corporate insiders and others from making some trades. The most important SEC rules, as well as the most significant cases in establishing insider trading doctrine-among them, Chiarella v. United States, Dirks v. Securities and Exchange Commission, and United States v. O'Hagan - are considered with an eye toward their relevance to what we will generally refer to as Congressional insider trading. To assess the practical need for regulation of Congressional insider trading, we also discuss Congressional ethics rules and the Speech or Debate Clause. The behavior of legislators and their aides is affected by both formal rules and informal norms, and we endeavor to explore both. The adequacy of current enforcement mechanisms for these rules and standards is also considered.

Keywords: Insider Trading, Regulation, Congress

JEL Classification: G38, K22

Suggested Citation

Barbabella, Matthew James and Cohen, Daniel J. and Kardon, Alex and Molk, Peter, Insider Trading in Congress: The Need for Regulation (December 20, 2008). 9 Journal of Business & Securities Law 199 (2009), Available at SSRN:

Matthew James Barbabella

Yale University ( email )

New Haven, CT 06520
United States

Daniel J. Cohen

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Alex Kardon

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Peter Molk (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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