IN AN EFFORT to curb insider trading, the Insider Trading Sanctions Act (ITSA) was signed into law by President Ronald Reagan on August 10, 1984. ITSA amends the Securities Exchange Act of 1934 which reflects a longstanding concern with fair and equitable markets. According to the Securities and Exchange Commission's (SEC) Division of Enforcement, insider trading is the most difficult and most serious challenge they face. Curiously, neither the Securities Act (1933) nor the Exchange Act define insider trading, forcing the SEC to construct various legal theories on the basis of the general anti-fraud provisions of these acts.

Reflecting this longstanding perspective on flexibility in defining insider trading, Congress (in its deliberations for ITSA) took no action in defining the term but favored continuing to give ...

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