Miriam Baer, a professor at Brooklyn Law School who served as an assistant U.S. attorney from 1999 to 2004 in the Southern District of New York, has a fine article in the Yale Law Journal headlined "Insider Trading's Legality Problem." It echoes and expands on some of the themes we have raised here in the past about the problems of insider trading law being devised (alternative Russell Conjugations: invented, improvised, made up out of whole cloth) by courts rather than Congress. Highlights:
What the Salman decision did not do, unfortunately, is take seriously the extent to which insider trading law falls short of criminal law's legality principle. The principle encompasses two distinct but related concepts. First, criminal prohibitions should be set forth with sufficient clarity to inform citizens in advance of what is prohibited; second, and of more importance in this context, crime creation is reserved solely for the legislature. Judges do not make crimes; legislatures do...
for criminal prosecutions of business insiders and direct tippees (not to mention remote tippees), the Supreme Court's trio of cases, Chiarella, Dirks, and O'Hagan, remain the primary sources from which lower courts derive insider trading's meaning. And with each new recitation on what the Court really meant in Dirks (or Chiarella or O'Hagan), insider trading law's connection to statutory language grows ever more remote...
There are drawbacks to the type of piecemeal lawmaking typified by the Supreme Court's insider trading jurisprudence, particularly in regard to criminal law. Criminal law's content benefits, both expressively and practically, from legislative deliberation. More importantly, as I explain in Part III, legislatures are capable of doing something that judges are not: breaking down a single crime into a series of graded crimes.