This Article explores the rationale behind corporate criminal liability for insider trading and whether the current regime of U.S. insider trading law holds the correct victim accountable. The Author begins by tracing the development of corporate criminal liability generally, and then examines corporate liability for insider trading under the current regime. Under this current regime, the Author addresses various shortcomings, such as the breadth of prosecutorial discretion in indicting corporations for its employees’ actions, and the harm incurred by innocent shareholders through punishing corporations.
The Author argues that the current regime for U.S. insider trading law is absurdly overbroad and wrongly punishes the victim for the crime. Recognizing the need for reform, the Author proposes statutory constraints on the overbroad prosecutorial discretion allowed for indicting corporations for insider trading. The Author argues that the proposed reforms would not affect individual liability for insider trading, but would properly limit corporate liability for insider trading in appropriate circumstances. The Author reasons that properly limiting corporate liability for insider trading furthers the ultimate goal of holding the correct party liable—the employees who commit the crime.