SEC SUPPORTS INSIDER TRADING DEFINITION
The Securities and Exchange
Commission said it supported legislation to define insider
trading and would recommend language for such a definition
within six weeks.
    Acting SEC chairman Charles Cox told the Senate Banking
Committee a bill proposed this week to define insider trading
as the wrongful use of material nonpublic information was good
but contained some ambiguous provisions which might reduce the
Commission's flexibility in prosecuting cases.
    "The Commission believes a definition of insider trading is
desirable," Cox said.
   
    He promised to provide the SEC's recommended definition to
the committee by August 3.
    The bill proposed by Sens. Donald Riegle, a Michigan
Democrat, and Alfonse D'Amato, a New York Republican, would
make it illegal for anyone to receive or pass on inside
information even if the person providing the information did
not use it to make a securities transaction.
    Federal law enforcement officials have said a definition of
insider trading would be useful because it is a difficult crime
to prove.
   
    Cox said the SEC was having success in its insider trading
cases despite the lack of a clear definition.
    He became acting chairman of the agency when chairman John
Shad left to become U.S. Ambassador to the Netherlands.
    President Reagan nominated Northwestern University law
professor David Ruder as SEC chairman on Wednesday, but he may
not be confirmed by the Senate for several weeks.
   
    Riegle, the chairman of the Senate securities subcommittee,
said he wanted to act on the legislation this year, but Thomas
Moore, a member of the President's Council of Economic
Advisors, said action should be delayed until the Supreme Court
ruled on the appearl of an insider trading conviction by former
Wall Street Journal reporter R. Foster Winans.
    Winans was convicted for telling a friend in advance what
stocks he was going to write about in his column. The stocks
usually went up or down in price depending on Winans'
recommendation.
   
    "We believe it would be better to wait until the Supreme
Court has reviewed the Winans case before any leigilation is
considered. After the court decides this case we can better
consider how the law might be changed. Until that time,
legislation is premature," Moore said in his testimony.
 Reuter
