Survey of National Legislation Regulating Insider Trading
In recent years much attention has been focused on the phenomenon of “insider trading.” The United States Securities and Exchange Commission (SEC) now appears to have wide-spread public support for its hard-line approach toward insider trading practices. Previously hostile to a broad prohibition of insider trading, even the Supreme Court has lent a sympathetic ear to the pleas of the SEC in the recent Carpenter case, which hinted at support for the misappropriation theory of insider trading. The prevailing attitude is that confidence in the fair operation of the securities markets must not be undermined by insiders who deprive those trading “fairly” from earning a profit; insiders must not be allowed to appropriate information in order to gain unjust enrichment. The U.S. securities exchanges are increasingly affected by foreign investors who trade on the U.S. exchange markets. The SEC considers cooperation by foreign governments and individuals vital to the successful implementation of U.S. insider trading regulations. In part as a response to pressure from the U.S. government, many governments around the world have enacted or are now considering new insider trading legislation.