Insider trading by members of Congress may be difficult to prove
Recent allegations regarding stock trading by members of Congress in the midst of the COVID-19 pandemic have raised calls for the investigation of these politicians for illegal “insider trading.”
But successfully prosecuting such cases will be very difficult. Even federal judges struggle with writing clear instructions to lay jurors in insider trading cases. Often, verdicts are reversed on appeal due to errors in explaining complicated legal terms.
There are two different provisions of law that could apply to the trading activity of senators and congressional staff.
Members of Congress and staff could run afoul of either or both of these laws. But proving a violation and convicting them is not likely.
Stock Act and securities law
The first provision is a rule known as Rule 10(b)(5) afte...