2019 Securities Enforcement Update

[...]the apparent increase is more likely an anomaly than a trend.2 As in prior years under this administration, the SEC's Enforcement Division this year continued to focus on cases impacting retail investors and on cyber-related cases, including initial coin offerings and other digital assets. Legislative Developments On December 9, 2019, the US House of Representatives overwhelmingly passed the Insider Trading Prohibition Act (Act), 410 to 13, which, if enacted, would codify a ban on insider trading.3 The Act amends the Securities Exchange Act of 1934 (Exchange Act),4 the securities fraud provisions of which courts have previously interpreted to prohibit insider trading. (A) theft, bribery, misrepresentation, or espionage (through electronic or other means); (B) a violation of any Federal law protecting computer data or the intellectual property or privacy of computer users; (C) conversion, misappropriation, or other unauthorized and deceptive taking of such information; or (D) a breach of any fiduciary duty, a breach of a confidentiality agreement, a breach of contract, a breach of any code of conduct or ethics policy, or a breach of any other personal or other relationship of trust and confidence for a direct or indirect personal benefit (including pecuniary gain, reputational benefit, or a gift of confidential information to a trading relative or friend). [...]since the House bill, like similar prior attempts a legislation, generally seeks to embody existing legal theories, critics argue that such attempts do little to simplify a complex and nuanced set of issues and actually risks adding vagueness and uncertainty. [...]despite significant support for the bill in the House, there appears to be little enthusiasm in the Senate for pursuing such legislation.