Abstract
This brief essay was prepared for a forthcoming symposium on Directive 2003/6/EC of the European Parliament and of the Council, which inter alia mandates a uniform regulatory regime for insider trading among EU member states. In this essay, I review the evolution of insider trading law in the United States for the benefit of EU observers in connection with the on-going process of member state implementation of the Directive. Although legal liability for insider trading in the United States is based on the federal securities regulation statutes, most notably Rule 10b-5 under the Securities Exchange Act of 1934, the prohibition of insider trading in fact exists almost independently of the relevant statutes. Instead, the law of insider trading has evolved through a series of judicial opinions in a process more closely resembling common law adjudication rather than statutory interpretation. Taken together, the statutes and case law provide a comprehensive scheme of insider trading regulation upon which EU member states usefully may draw in implementing the Directive. As the essay explains, however, the ad hoc process by which U.S. law evolved has created a number of doctrinal problems that the member states would do well to avoid.
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