Insider Trading Prohibition Act

Floor Speech

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Mr. HIMES. Mr. Speaker, I thank Mr. Emanuel Cleaver for yielding, and I thank my subcommittee ranking member, Mr. Hill, for a very good characterization of the project we are undertaking here.

I will emphasize two things.

Number one, at a moment when we are working hard to find ways to work in a bipartisan fashion in the public interest, this is landmark legislation. As Mr. Hill pointed out, we passed it in the last Congress with a vote of 410-13, and that was the result of a very comprehensive and fairly technical negotiation around the fine points of insider trading.

The second thing I would point out is that everyone in this Chamber should agree that law is to be made in this Chamber, not in the chambers of unelected judges throughout the land. While Mr. Hill is correct that there has been a vast body of court-made law around insider trading developed over the generations, that is far from ideal and, frankly, an abrogation of the legislative responsibilities of the United States Congress. So, we are where we are.

We have attempted to make clear and clear up a great deal of the uncertainty, the reversed convictions, the activities in the Second Circuit that have overturned convictions and created uncertainty in the law. This is an effort to make clear what I think everyone understands, which is that if you trade on information that you know to have been wrongly obtained or that you wrongly obtained or that you recklessly disregard was wrongly obtained, you are doing something wrong. In this case, with the passage of this legislation, it will be clear that you have violated the law.

I am excited for the passage of this legislation because I am a believer that it is, in fact, the elected legislators of this country and not the judges, as important as their role may be, who should determine what we consider wrong in statute and what we punish people for doing.

Finally, of course, it is essential that everyone out there have confidence in our markets. Every time there is another headline about an insider trader or a reversed conviction of insider trading, that confidence is damaged. So, I applaud the bringing of this bill to the floor.

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Mr. HIMES. Mr. Speaker, I must say, as much respect as I have for Mr. Huizenga--I have been around here a little while--I think this may be the first time I have heard from my colleagues on the other side of the aisle that the regulators deserve deference on this, that the regulators are not asking us to make a statutory change. I have never heard that in this Chamber--this Chamber--which, under Article I of the Constitution, is charged with writing the laws of this country.

Apparently, my Republican friends, who don't typically defer to regulators, are now saying the SEC is, at best, neutral on this law.

Is there damage?

I would urge anybody who wants to know about that to read the activities of the Second Circuit Court of Appeals in the overturning of conviction after conviction of hedge fund managers and others around points of technical complexity.

We make the laws. We don't ask the regulators whether they would like us to, or whether they would cheer us on in making laws. We make the laws. If we are going to send people to jail, if we are going to stop the confusion of judge-made law, let's do our job and pass this legislation.

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