{ "id": "RS21127", "type": "CRS Report", "typeId": "REPORTS", "number": "RS21127", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 460419, "date": "2017-04-12", "retrieved": "2017-08-22T15:10:31.657439", "title": "Federal Securities Law: Insider Trading", "summary": "Insider trading in securities may occur when a person in possession of material nonpublic information about a company trades in the company\u2019s securities and makes a profit or avoids a loss. Certain federal statutes have provisions that have been used to prosecute insider trading violations. For example, Section 16 of the Securities Exchange Act of 1934 requires the disgorgement of short-swing profits by named insiders\u2014directors, officers, and 10% shareholders. The 1934 Act\u2019s general antifraud provision, Section 10(b), is frequently used in the prosecution of insider traders. Although the statute does not specifically mention insider trading but, instead, forbids the use of \u201cmanipulative or deceptive\u201d means in buying or selling securities, case law has clarified that insider trading is the type of fraud that is prohibited by Section 10(b). Securities and Exchange Commission (SEC) rules issued to implement Section 10(b), particularly Rule 10b-5, have also been frequently invoked in insider trading prosecutions. With the Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988, Congress enacted legislation that imposed up to treble damages (and in some cases the greater of $1 million or up to treble damages) on persons found guilty of insider trading. More recently, the Stop Trading on Congressional Knowledge (STOCK) Act of 2012 (P.L. 112-105) explicitly stated that there is no exemption from the insider trading prohibitions for Members of Congress, congressional employees, or any federal officials. As noted above, SEC Rule 10b-5 is the most frequently used SEC rule in lawsuits that charge violations of insider trading prohibitions. However, other SEC rules, some of which specifically target insider trading, are also important.\nThere are numerous cases in which Section 10(b) and Rule 10b-5 have been used to prosecute insider trading violations. The most recent case of note is the Supreme Court\u2019s decision in Salman v. United States. On December 6, 2016, the Court unanimously upheld the conviction of Bassam Yacoub Salman for insider trading on tips that he had received from his brother-in-law. The Court agreed with federal prosecutors that a trader can be guilty of violating insider trading prohibitions even if the insider did not receive a tangible benefit, such as money or property, for passing the tip so long as the trader and insider are friends or relatives.\nNo bill concerning insider trading appears to have been introduced in the 115th Congress to date. However, several bills, including H.R. 1173, H.R. 1625, and S. 702, were introduced in the 114th Congress before the Supreme Court\u2019s Salman decision. The Salman decision appears not to go as far as these bills would have in prohibiting the acts of trading in securities with inside information and disclosing inside information.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RS21127", "sha1": "23c7106ec8303f82e3c5e1fbdd76d19bb9f3e9c2", "filename": "files/20170412_RS21127_23c7106ec8303f82e3c5e1fbdd76d19bb9f3e9c2.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RS21127", "sha1": "36174d2b18e501200b69074ce8f237e5d2832b15", "filename": "files/20170412_RS21127_36174d2b18e501200b69074ce8f237e5d2832b15.pdf", "images": {} } ], "topics": [] }, { "source": "EveryCRSReport.com", "id": 450271, "date": "2016-03-01", "retrieved": "2016-03-24T17:02:27.441692", "title": "Federal Securities Law: Insider Trading", "summary": "Insider trading in securities may occur when a person in possession of material nonpublic information about a company trades in the company\u2019s securities and makes a profit or avoids a loss. Certain federal statutes have provisions which have been used to prosecute insider trading violations. For example, Section 16 of the Securities Exchange Act of 1934 requires the disgorgement of short-swing profits by named insiders\u2014directors, officers, and 10% shareholders. The 1934 Act\u2019s general antifraud provision, Section 10(b), is frequently used in the prosecution of insider traders. Although the statute does not specifically mention insider trading but, instead, forbids the use of \u201cmanipulative or deceptive\u201d means in buying or selling securities, case law has made clear that insider trading is the type of fraud that is prohibited by Section 10(b). Securities and Exchange Commission rules issued to implement Section 10(b), particularly Rule 10b-5, have also been frequently invoked in insider trading prosecutions. In the Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988, Congress enacted legislation imposing up to treble damages (and in some cases the greater of $1 million or up to treble damages) on a person found guilty of insider trading. More recently, the Stop Trading on Congressional Knowledge (STOCK) Act of 2012 explicitly stated that there is no exemption from the insider trading prohibitions for Members of Congress, congressional employees, or any federal officials. As stated above, SEC Rule 10b-5 is the most frequently used SEC rule in lawsuits that charge violations of insider trading prohibitions. However, other SEC rules, some of which specifically target insider trading, are also important. There are numerous cases that have used Section 10(b) and Rule 10b-5 to prosecute insider trading violations.\nThe decision by the U.S. Court of Appeals for the Second Circuit (Second Circuit) in United States v. Newman has brought increased attention to the issue of insider trading. In its December 10, 2014, decision, the Second Circuit overturned two high-profile convictions for insider trading. The court did not simply vacate the convictions; it remanded for the district court to \u201cdismiss the indictment with prejudice,\u201d thereby forbidding the government from refiling the case. The Second Circuit held that the evidence against two stock fund analysts could not sustain a guilty verdict because the government did not adequately show that the alleged insiders received personal benefits for providing information to the stock fund analysts and that the government did not present evidence that the defendants knew that they were trading on inside information obtained from insiders who were violating their fiduciary duties. The U.S. Attorney for the Southern District of New York asked the Second Circuit to reconsider the ruling, but on April 3, 2015, the Second Circuit denied the U.S. Attorney\u2019s request. On July 30, 2015, the U.S. Department of Justice asked the Supreme Court to review the Second Circuit decision. On October 5, 2015, the U.S. Supreme Court declined to hear the Newman insider trading appeal.\nOn July 6, 2015, a case decided by the U.S. Court of Appeals for the Ninth Circuit may have further complicated insider trading law. The case, Salman v. United States, affirmed a lower court decision finding a breach of fiduciary duty and creation of a personal benefit in a family insider trading situation, holding that the \u201cgift\u201d of inside information was sufficient to create liability for insider trading. On January 19, 2016, the U.S. Supreme Court granted certiorari in the Salman case.\nSeveral bills, including H.R. 1173, H.R. 1625, and S. 702, have been introduced in the 114th Congress to attempt to prevent the type of securities trading allowed by the Newman decision. This report will be updated as warranted.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RS21127", "sha1": "279759e3bcd9db9ff32ef97caa54158851887a87", "filename": "files/20160301_RS21127_279759e3bcd9db9ff32ef97caa54158851887a87.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RS21127", "sha1": "10e5934881378dd7860d25109d4aaf432bdceff2", "filename": "files/20160301_RS21127_10e5934881378dd7860d25109d4aaf432bdceff2.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc824458/", "id": "RS21127_2016Feb02", "date": "2016-02-02", "retrieved": "2016-04-04T14:48:17", "title": "Federal Securities Law: Insider Trading", "summary": "This report discusses various regulations regarding insider trading violations. Insider trading in securities may occur when a person in possession of material nonpublic information about a company trades in the company's securities and makes a profit or avoids a loss.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20160202_RS21127_7906595a4b76142d28f871dd61c5798741984abb.pdf" }, { "format": "HTML", "filename": "files/20160202_RS21127_7906595a4b76142d28f871dd61c5798741984abb.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "Securities regulation", "name": "Securities regulation" }, { "source": "LIV", "id": "Insider trading in securities", "name": "Insider trading in securities" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc818280/", "id": "RS21127_2015Oct05", "date": "2015-10-05", "retrieved": "2016-03-19T13:57:26", "title": "Federal Securities Law: Insider Trading", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20151005_RS21127_356edcee76e7ed79489a0b6d910cc5c3471da596.pdf" }, { "format": "HTML", "filename": "files/20151005_RS21127_356edcee76e7ed79489a0b6d910cc5c3471da596.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc822661/", "id": "RS21127_2015Jun18", "date": "2015-06-18", "retrieved": "2016-03-19T13:57:26", "title": "Federal Securities Law: Insider Trading", "summary": "Insider trading in securities may occur when a person in possession of material nonpublic information about a company trades in the company's securities and makes a profit or avoids a loss. This report discusses various regulations regarding insider trading violations.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150618_RS21127_7dfaa8e53ee80d84db883df65d508943ac3620ec.pdf" }, { "format": "HTML", "filename": "files/20150618_RS21127_7dfaa8e53ee80d84db883df65d508943ac3620ec.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "Securities", "name": "Securities" }, { "source": "LIV", "id": "Insider trading in securities", "name": "Insider trading in securities" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc743653/", "id": "RS21127_2015Jun01", "date": "2015-06-01", "retrieved": "2015-10-20T21:35:54", "title": "Federal Securities Law: Insider Trading", "summary": "This report discusses various regulations regarding insider trading violations. Insider trading in securities may occur when a person in possession of material nonpublic information about a company trades in the company's securities and makes a profit or avoids a loss.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150601_RS21127_38b6ecf15a6e761f6383411733eba6e64918e097.pdf" }, { "format": "HTML", "filename": "files/20150601_RS21127_38b6ecf15a6e761f6383411733eba6e64918e097.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "Securities regulation", "name": "Securities regulation" }, { "source": "LIV", "id": "Insider trading in securities", "name": "Insider trading in securities" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metacrs2834/", "id": "RS21127 2002-01-30", "date": "2002-01-30", "retrieved": "2005-06-11T11:34:45", "title": "Federal Securities Law: Insider Trading", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20020130_RS21127_1440d1972af71df3d2541a29b6dc9d5f87c7619f.pdf" }, { "format": "HTML", "filename": "files/20020130_RS21127_1440d1972af71df3d2541a29b6dc9d5f87c7619f.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "Insider trading in securities", "name": "Insider trading in securities" } ] } ], "topics": [] }