A bill introduced by 4th District Congressman Jim Himes has been passed unanimously by the Financial Services Committee. The Insider Trading Prohibition Act makes it a federal crime to trade a security based on material, nonpublic information that was wrongfully obtained.
Himes says this would end decades of ambiguity for a crime that has never been clearly defined by law. Himes added that it's unfair to Americans and harmful to the markets when individuals trade on material, non-public information.
The measure also makes it expressly illegal to communicate that “tip” to another person when it is reasonably foreseeable that the person is likely to trade on that information. Himes notes that they do define wrongful as information that has been obtained through “theft, bribery, misrepresentation or espionage, a violation of any federal law protecting computer data or the intellectual property or privacy of computer users, conversion, misappropriation or other unauthorized and deceptive taking of such information, or a breach of any fiduciary duty or any other personal or other relationship of trust and confidence."