Preet Bharara and an SEC commissioner, Robert J. Jackson Jr., have an op-ed in the New York Times acknowledging "a good bit of insider trading law remains ambiguous" and describing "uncertainty," and "a legal haziness that leaves both investors and defendants unclear about what sorts of information-sharing or other activities by investors would be considered insider trading, and what are the acceptable forms of data-gathering and research that are part of any healthy, functioning financial marketplace."
Now he tells us! You'd think that maybe Bharara would have publicly acknowledged this ambiguity and haziness before bringing a series of cases that destroyed careers and imposed huge costs on the individuals who were accused. In fact you can almost certainly go back and find legal briefs filed by the U.S. attorney's office under Bharara's leadership claiming the contrary — that, rather than ambiguous or hazy, the insider trading laws were clear-cut, and that any assertions otherwise were desperate and self-serving efforts by guilty defendants. Fortunately, the Second Circuit mostly didn't buy it.
Now Bharara has a proposed solution:
The law can be updated and made clearer. Ideally, Congress would take the lead. But bipartisan proposals to update the law have languished for years. The S.E.C., however, does have the authority to clarify insider trading law. The commission should use that authority before the next wave of corporate abuses.
That's why we are announcing the creation of the Bharara Task Force on Insider Trading, a panel of experts that will propose new insider trading reforms to protect American investors.
The task force will be led by Mr. Bharara and will consist of eight distinguished former regulators and prosecutors, judges, academics and defense lawyers who have agreed to put forth concrete proposals to update the insider trading law. We hope the S.E.C., and perhaps even Congress, will consider the group's recommendations.
It's not just an "ideal" that Congress, rather than the SEC, writes the criminal laws. It's the Constitution, which vests in Congress "all legislative powers herein granted." It is heartwarming, though, to see Mr. Bharara echoing FutureOfCapitalism.com on this point; I wrote here back in November 2014: "In an ideal world, clarifying the insider trading laws would be a job for Congress." Mr. Bharara owes me a footnote, but I won't begrudge him the point; I'm happy enough to see him finally making this point publicly four years later.
As for the idea of calling this the "Bharara Task Force on Insider Trading," here Mr. Bharara is making an error. It's not about him, or at least it shouldn't be, if the effort is to have any hope of success. Call it the David Ganek task force, or the Michael Steinberg task force, or the Todd Newman task force, or the Rengan Rajaratnam task force, or the Miriam Baer task force, after the author of the Yale Law Journal article on Insider Trading's Legality Problem. Or the Robert Jackson task force, after the attorney general who warned that the "most dangerous power of the prosecutor" is "that he will pick people he thinks he should get, rather than pick cases that need to be prosecuted." Or the Jonathan Macey task force, after the Yale law professor who has been a consistently principled voice on this issue.