House passes bill to explicitly ban insider trading

House passes bill to explicitly ban insider trading
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The House on Thursday passed a bill to explicitly ban making financial trades based on confidential information, a process commonly known as insider trading.

Lawmakers approved the Insider Trading Prohibition Act by a near unanimous 410 to 13 vote, with just 12 Republicans and independent Rep. Justin AmashJustin AmashHouse Armed Services chairman calls for removal of Navy chief Overnight Defense: Trump 'may look into' dismissal of Navy captain | Acting Navy chief stands by speech calling ousted captain 'stupid' | Dems call for chief's firing | Hospital ship to take coronavirus patients Democratic lawmakers call for Navy chief's firing MORE (Mich.) opposing the bill.

If passed by the Senate and enacted by President TrumpDonald John TrumpSenators demand more details from Trump on intel watchdog firing Overnight Health Care: Trump steps up attack on WHO | Fauci says deaths could be lower than first projected | House panel warns federal stockpile of medical supplies depleted | Mnuchin, Schumer in talks over relief deal Trump says he'll look into small business loan program restricting casinos MORE, the bill would create the first direct ban on insider trading. Such transactions typically involve a person buying or selling shares of a company based on nonpublic information that will substantially affect the stock price upon release. 

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While federal regulators and law enforcement agencies commonly prosecute and convict individuals alleged to have traded on nonpublic information, defendants are typically accused of bank fraud, wire fraud or other explicit crimes.

The bill is the latest congressional effort to crack down on insider trading both nationally and within the halls of Congress. Despite their immense influence over U.S. commerce, lawmakers have few limits on the makeup of their financial portfolios as long as they disclose their assets.

Former Rep. Chris CollinsChristopher (Chris) Carl CollinsHouse bill would ban stock trading by members of Congress Former Rep. Chris Collins sentenced to 2 years in prison for insider trading GOP leaders encourage retiring lawmakers to give up committee posts MORE (R-N.Y.) pleaded guilty in October to conspiring to commit securities fraud and making false statements after he was indicted in 2018 on 11 charges related insider trading of shares of an Australian pharmaceutical company.

Prosecutors alleged that Collins, who had served on the company’s board of directors, gave nonpublic information about drug trial results to his son to help him "make timely trades in Innate stock and tip others." 

Collins was unable to sell his shares of the company, Innate Immunotherapeutics, and lost roughly $17 million after damaging test results were announced. But his son allegedly avoided more than $570,000 in losses because of the alleged tip from the congressman.

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Multiple Republican lawmakers told The Hill in 2018  that Collins had boasted about making money for other members of Congress by urging them to invest in the company.

The late Rep. Louise SlaughterDorothy (Louise) Louise SlaughterHouse passes bill to explicitly ban insider trading Sotomayor, Angela Davis formally inducted into National Women's Hall of Fame Seven Republicans vote against naming post office after ex-Rep. Louise Slaughter MORE (D-N.Y.), asked the Securities and Exchange Commission (SEC) and federal prosecutors in 2017 to investigate Collins under the STOCK Act, which she authored in 2012 banning members of Congress from insider trading.

Updated at 7:16 p.m.