The U.S. Supreme Court today decided Salman v. United States, No. 15-628, yet another case in the continuing saga of when trading securities based on an insider tip is against the law.
What always struck me as very odd about insider trading is that we have this enormous body of law with both criminal and civil liabilities, and at the root of it all is a very broadly worded regulation, SEC Rule 10b-5, not a statute. The statute in question, 15 U.S.C. ยง 78j(b), makes it a crime to trade securities using "any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe ...."
Should insider trading be a crime? Yes, under some circumstances. But Congress should make it a crime, not the SEC. Administrative agencies have a place in modern civil law, filling in gaps that the legislature will not get around to, but defining crimes should be a non-delegable legislative power.
What always struck me as very odd about insider trading is that we have this enormous body of law with both criminal and civil liabilities, and at the root of it all is a very broadly worded regulation, SEC Rule 10b-5, not a statute. The statute in question, 15 U.S.C. ยง 78j(b), makes it a crime to trade securities using "any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe ...."
Should insider trading be a crime? Yes, under some circumstances. But Congress should make it a crime, not the SEC. Administrative agencies have a place in modern civil law, filling in gaps that the legislature will not get around to, but defining crimes should be a non-delegable legislative power.
Leave a comment