Insider Trading Prohibition Act: First Analysis

Summary

This article discusses the H.R. 2534, “Insider Trading Prohibition Act” (ITPA), passed on December 5, 2019, by a large, bipartisan majority of the House of Representatives. The bill was sponsored by Congressman Jim Himes (D-Conn.) and is one of several pieces of legislation that was initially proposed in the wake of the Second Circuit’s 2014 decision, United States v. Newman, 773 F.3d 438 (2d Cir. 2014). The Second Circuit’s Newman decision established a narrow “pecuniary benefit” view of tippee liability. The Supreme Court overturned the Newman court’s standard for tippee liability in Salman v. United States, 580 U.S. ____ (2016), discussed infra. The Salman Court left unchallenged the Newman court’s separate holding that conviction of an indirect tippee requires the government to prove that the tippee knew that the tipper personally benefitted from disclosing inside information.