ICAN’s amicus brief is focused entirely on the SEC’s theory of the case, not the fight over facts. According to the nonprofit, the commission is overreaching Supreme Court precedent and its mandate under federal securities laws by trying to block investors from trading in shares of a competing or related company based on confidential information about their own employer.
ICAN said that SEC has improperly staked out new ground for insider trading liability without authorization from Congress, which has toyed with the prospect of clarifying the rules for trading based on confidential information but has not enacted any new insider trading laws.
The commission’s bold incursion into new legal territory, according to ICAN, is prohibited by the Supreme Court’s major questions doctrine.
“The entire insider trading body of law has a weak statutory basis. So it’s a step too far to pile on top of that a new ‘shadow’ theory,” said ICAN founder Nick Morgan of Paul Hastings and amicus brief author Stephen Cazares of Orrick, Herrington & Sutcliffe via email. “The SEC should first obtain clear statutory delegation from Congress before pursuing such an expansive theory.”
‘Enforcement 40’ for 2020
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