Justice Scalia's statement, joined by Justice Thomas, announcing that he "will be receptive to granting" a petition from someone challenging the idea that a court should defer to the Securities and Exchange Commission's definition of insider trading law has triggered a laudatory editorial in the Wall Street Journal.
The Journal editorial expresses the wish that Justice Scalia will live (and, presumably, continue serving on the high court) "forever." The Journal concludes:
The insider-trading laws need clarifying by the courts, much as the Justices limited the much-abused "honest services" statute in 2010 in Skilling v. U.S. Let's hope Justice Scalia gets his chance.
Kudos to the Journal for noticing Justice Scalia's statement, and for agreeing that the insider-trading laws "need clarifying."
Where FutureOfCapitalism would gently and respectfully differ with the Journal is on the question of who should do the clarifying. The Scalia-Thomas statement (which the Journal, in a display of old-media bravado, doesn't even hyperlink to) speaks of "the norm that legislatures, not executive officers, define crimes." It might have added, "not justices." In an ideal world, clarifying the insider trading laws would be a job for Congress. Earlier efforts by the Supreme Court to clarify the law have only muddied the issue further (remember Dirks footnote 14?)
A Congressionally led approach, alas, might provide little consolation for the individuals facing prison on the basis of insider trading cases brought out of a combination of a prosecutor's misguided zeal and the SEC and earlier courts' flawed interpretations of statutes. If those convicts have to wait for Congress to rewrite the law, they may have to wait a long time. As Justices Scalia and Thomas pointed out, the executive does not have the power to define crimes. But under Article II Section 2 of our Constitution the president does have the power "to grant reprieves and pardons for offenses against the United States."
The best outcome here would be presidential pardons for the improperly snared defendants — not all insider trading cases, just the real stretches, like that of Michael Steinberg, for example. Combine that with swift Congressional action to clarify the law, and Justice Scalia could relax and spend his retirement years enjoying hunting trips with Justice Kagan. Until that happens, those concerned with markets where information can move freely without fear of imperious and arbitrary prosecutors turning stock research into a crime will have to wait for Justices and Scalia and Thomas and and least three other justices (enough for a majority of the Nine) to step up.