Sponsors (5)
The bill strengthens and clarifies federal insider-trading prohibitions to improve market fairness and enforcement but raises compliance costs, broadens potential liability for market actors, and may create short-term regulatory uncertainty around exemptions.
Investors and market participants gain a clearer federal prohibition on insider trading and tipping covering securities and security-based swaps, strengthening enforcement and improving market fairness.
Traders using compliant preplanned trading programs retain a safe harbor because transactions under SEC Rule 10b5–1 are explicitly exempted, reducing legal risk for routine automated or preplanned trades.
Traders and firms will face higher compliance costs and increased enforcement exposure from a broader federal insider-trading statute.
The conscious-avoidance and reckless-disregard standards may expand liability, exposing employees, intermediaries, and advisors to litigation even if they lacked precise knowledge of wrongful conduct.
SEC exemption authority could create regulatory uncertainty if exemptions are applied unevenly or delayed, leaving market participants unclear about covered conduct until implementing rules or orders are issued.
Based on analysis of 2 sections of legislative text.
Establishes a standalone federal ban on insider trading and wrongful tipping across securities and security‑based swaps, defines wrongful acquisition, excludes SEC Rule 10b5–1-compliant trades, and authorizes SEC exemptions.
Official title: Amend the Securities Exchange Act of 1934 to prohibit certain securities trading and related communications by those who possess material, nonpublic information, and for other purposes.
Introduced August 6, 2026 by John F. Reed · Last progress August 6, 2026
Creates a standalone federal prohibition on insider trading and wrongful tipping covering securities, security-based swaps, and security-based swap agreements. It makes trading (or causing trading) while aware, consciously avoiding awareness, or recklessly disregarding that one possesses material nonpublic information unlawful when the information was wrongfully obtained or the trade would be wrongful, and separately bans wrongful communications that are intended to, and do, result in trading. Defines “wrongful” methods of obtaining or using information to include theft, conversion, bribery, misrepresentation, espionage, violations of computer or privacy laws, misappropriation, or breach of fiduciary duty for direct or indirect personal benefit (including pecuniary, reputational, or gifting of confidential information). The SEC may exempt persons, securities, or transactions by rule or order; transactions that comply with SEC Rule 10b5–1 are excluded; and remedies under the new section are cumulative with other legal and equitable remedies.