The House of Representatives yesterday passed what might seem to be a pretty substantial piece of legislation. Offered by Rep. Jim Himes (D-Hedge Funds), the bill would categorically make insider-trading illegal. Any person in possession of wrongfully-obtained non-public information that could reasonably be expected to impact a stock’s price would be guilty of the crime, whether or not she knew that the information was revealed in exchange for a “direct or indirect personal benefit,” on in contravention of some fiduciary duty, or by hacking or lying or whatever.
This potentially revolutionary action was waved through without much fuss. Why? Well, because, as it happens, insider-trading is still illegal, if not quite as illegal as it used to be, and also because, just like the last attempt to illegalize this already illegal thing, it’s probably going nowhere, and—oh yea—it’s not all that revolutionary.
John Coffee, a professor at Columbia Law School, said on Tuesday that the language limits the bill's value by allowing Wall Street traders to exchange information on the expectation of future favors and viewed it as unlikely to gain traction in a Democratic-controlled Senate.
Nice try, though, guys. Maybe you’ll get this cracked nut figured out next time.
U.S House passes insider trading bill [Reuters]