Thus, the STOCK Act made explicit what Congress had previously ratified through its enactment of ITSA and ITSFEA.
To the contrary, the legislative developments reflected in ITSA, ITSFEA, and the STOCK Act evidence concerted congressional judgments rendered only after repeated consultations with securities law scholars and practitioners, and more importantly, with the expert agency officials at the SEC.
Along with the O 'Hagan decision, the Exchange Act amendments (in ITSA, ITSFEA, and the STOCK Act), and Regulation FD, the Delaware judiciary's expanded notion of the fiduciary duty of loyalty has an important bearing on insider trading cases involving gratuitous tipping.
1264 (1984); Insider Trading and Securities Fraud Enforcement Act of 1988 (ITSFEA), Pub.
Thus, for example, Congress explicitly found, in section 2 of the ITSFEA
, that the SEC's rules and regulations governing insider trading were "necessary and appropriate," and that the Commission had "enforced such rules and regulations vigorously, effectively, and fairly." (201) Similarly in O'Hagan, the Court both accepted the misappropriation theory proffered by the government as encompassing the necessary deception required by its earlier decisions (202) and upheld the SEC's adoption of Rule 14e-3.
575, 608 (observing that Congress passed ITSFEA
after "fram[ing] insider trading as an issue of immorality and punishment ...
Such a program may considerably reduce the possibility that a firm will be found "reckless" and therefore liable under ITSFEA
for not being aware of probable employee violations.
implementation of ITSFEA
had a "significant impact" in
145, 158 n.57 (1989) (explaining that the ITSFEA
's "possession" language "did not mean that [Congress] endorsed a `possession' standard" because "[t]his language had appeared in ITSA and [Congress] simply replicated existing language," and asserting that "this legislation was entirely neutral with respect to the debate over the possession standard").
This culminated in the passage of the SEC's legislative proposals in 1984 (ITSA), and in 1988 (ITSFEA).
The SEC Lobbies Congress for the Passage of the ITSFEA of 1988
The SEC sought to restrict insider trading further by asking Congress to pass the ITSFEA, which was enacted on November 19, 1988.(18) The ITSFEA provided for bounties to informers of up to 10% of illegal insider-trading profits.