What's So Bad About Insider Trader Law?

28 Pages Posted: 26 Jun 2015 Last revised: 16 Sep 2015

See all articles by Peter J. Henning

Peter J. Henning

Wayne State University Law School

Date Written: 2015


The law of insider trading has been called everything from a “theoretical mess” to “astonishingly dysfunctional,” with calls for change from Congress and the Securities and Exchange Commission to clarify the scope of the prohibition. But is the law really so bad? The elements are now well established, despite gray areas around the edges – which is not all that different for other white collar crimes. Congress and the general public have embraced insider trading as something clearly wrongful. If the law needs to be changed, the most likely push would be to expand it by adopting a possession theory of liability that makes trading on almost any confidential information subject to prosecution. That liability theory is already used by the European Union and is included in Rule 153-e for tender offers.

Keywords: Criminal Law; White Collar Crime; Insider Trading; Securities Fraud

Suggested Citation

Henning, Peter J., What's So Bad About Insider Trader Law? (2015). Business Lawyer , Vol. 70, Summer 2015, Wayne State University Law School Research Paper No. 2015-02, Available at SSRN: https://ssrn.com/abstract=2622671

Peter J. Henning (Contact Author)

Wayne State University Law School ( email )

471 West Palmer Ave.
Detroit, MI 48202
United States

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