Insider Trading Loopholes Need to Be Closed
Current rules still allow executives to time their share sales to maximize gains. SEC Commissioner Caroline Crenshaw sees a "cooling off period" as one solution.
Insider trading is back in focus at the SEC
Photographer: SAUL LOEB/AFP via Getty Images
During a game of golf, a senior executive mentions to a friend that his company is about to merge with a larger competitor. He says that anyone who buys stock now will make a big profit. In exchange for the tip, he asks his friend to purchase shares for him, too.
That's not the plot of an episode of “Billions” — it’s the kind of real-life scenario that spawned securities laws prohibiting corporate executives from trading on inside information. The Securities and Exchange Commission doesn’t just enforce the rules, it makes them. It’s been more than two decades since the SEC made major changes to insider trading rules, and it's well past time to revisit whether investors are sufficiently protected, or if the rules are being abused.