Abstract

The current insider trading law has its gaps and imperfections, notably not covering scenarios where recipients acquire inside information unintentionally within the regulatory scope of insider trading. Given that the written law has not been altered yet, the SEC should, based on its own authority, formulate Rules 10b5-3 and 10b5-4 to rectify the deficiencies in the current law in defining the element of “deception”. The proposal of these rules, while addressing existing loopholes, reasonably expands the regulatory scope of current insider trading, and maintains market efficiency.

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