This post was written by Amy J. Greer.
Just as the SEC and DOJ are basking in the glow of the Rajaratnam guilty verdict, we once again find Congress shaking its finger at the regulators, suggesting that perhaps they’re not doing their job well enough in connection with another insider trading investigation – like somehow the enforcement types at the SEC and DOJ don’t have an interest in catching the bad guys. (As someone who used to be among those ranks, I’ve never quite understood this theory – but I digress.) From a group that is not itself prohibited from insider trading, I consistently find this conduct remarkable.
While there is always plenty of discussion around issues of whether insider trading is inherently “bad,” Congress doesn’t seem troubled by this largely academic inquiry; this latest salvo being Exhibit A. Yet, as I noted in a prior post, the law of insider trading can be excruciatingly complex and technology keeps stretching its limits. Note, for example, the non-fiduciary thief cases, like Dorozhko, which, at first blush, seem like they should be, but are not, insider trading cases, and present substantial and developing issues for regulators and the courts. Still, there seems little interest in Congress – the actual makers of law in this country – to simplify or streamline (or touch) this body of law.
Maybe it’s just me, but among the governed, government’s ability to address, much less solve, problems seems hampered by a real credibility gap. Perhaps if Congress spent a little less time asking regulators who they’re investigating and how, and a little more time addressing their own ethics rules – so that they, too, would be prohibited from insider trading – they could close that gap, just a bit.