Todd Henderson and Lyle Roberts, '96, Write on Problems with the Insider Trading Prohibition Act

Fixing the insider trading prohibition act

The Insider Trading Prohibition Act is back and stalking the halls of Congress again. After being passed by the House in late 2019, ITPA went on to a deserved demise in the Senate. With the change in Senate control this year, the House has passed the bill again, and there is renewed hope for its sponsors — and renewed concerns for market participants who may need to comply with an even more ambiguous set of insider trading rules.

When talking about insider trading, it is important to put aside most common wisdom on the topic. There is nothing unlawful about trading based on “material nonpublic information” about a company.

Investment advisors and stock market analysts make their living seeking information advantages for their clients. Indeed, public policy generally supports the release of as much corporate information as possible into the market, and our regulatory scheme should incentivize investors to seek out and publicize that information.

Read more at The Hill