Insider Trading Prohibition Act

Floor Speech

Mr. Speaker, stopping and punishing bad actors for illegal insider trading is a top priority for House Republicans. This illegal activity hurts everyday Main Street investors as well as the integrity and efficiency of our markets. Trading on material insider information in breach of fiduciary duty is currently prohibited by court-made law under the antifraud provisions of the Federal securities laws.

The Securities and Exchange Commission, the SEC, and the Department of Justice have the power to bring insider trading cases, and both agencies regularly exercise this power.

One body of insider trading law that has been developed is through the courts. Decades of judicial precedent are in place to protect investors and markets by punishing bad actors who illegally trade on insider information.

Codifying nuanced case law and regulations that have been developed over the decades into a single statute prohibiting insider trading is a serious undertaking, and the gentleman from Connecticut (Mr. Himes) has tackled this challenging task.

To be explicitly clear, this legislation's intent is to codify, and neither expand nor contract, insider trading law as it is currently understood and interpreted by the Federal courts.

Again, there should not be a single cause of action available under this law that would not otherwise be available to Federal prosecutors or SEC enforcement attorneys under the already existing securities laws. I underscore this point because both Republican and Democratic SEC Commissioners have expressed concerns about Congress drafting a statute that accurately captures this expansive body of law without expanding it.

I agree with them. I think it would be tough to draft a perfect insider trading law. But with that said, I appreciate the gentleman from Connecticut's intentions not to expand the scope of current insider trading enforcement and his willingness to work with us in a bipartisan manner last Congress and again in this Congress.

Specifically, Ranking Member Patrick McHenry's amendment last Congress, included in the base text of this year's provision, provides the needed changes to align the explicit personal benefit test more closely with Supreme Court precedent. It also clarifies ambiguous wording to ensure that judges and prosecutors know that this bill is not intended to expand or create new insider trading liability.

Republicans will continue to speak out and support efforts to combat illegal insider trading.

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Mr. HILL. Mr. Speaker, I thank my friend from Connecticut for his vigorous defense, always welcome on the House floor, of Article I power here in the Congress. Both sides of the aisle are grateful for that, as we defend it on a regular basis. We thank him for his work.

Mr. Speaker, I think this is a good debate. Again, I thank my friend from Michigan and my friend from Connecticut for the quality of that debate.

Mr. Speaker, I urge my colleagues to support H.R. 2655, and I yield back the balance of my time.

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