IB 
Union Calendar No. 172 
116TH CONGRESS 
1ST SESSION H. R. 2534 
[Report No. 116–219] 
To amend the Securities Exchange Act of 1934 to prohibit certain securities 
trading and related communications by those who possess material, non-
public information. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 7, 2019 
Mr. HIMES introduced the following bill; which was referred to the Committee 
on Financial Services 
SEPTEMBER 27, 2019 
Additional sponsors: Mrs. CAROLYN B. MALONEY of New York and Mr. HECK 
SEPTEMBER 27, 2019 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on May 7, 2019] 
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A BILL 
To amend the Securities Exchange Act of 1934 to prohibit 
certain securities trading and related communications by 
those who possess material, nonpublic information. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1 SHORT TITLE. 
This Act may be cited as the ‘‘Insider Trading Prohi-
bition Act’’. 
SEC. 2. PROHIBITION ON INSIDER TRADING. 
(a) IN GENERAL.—The Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.) is amended by inserting after 
section 16 the following new section: 
‘‘SEC. 16A. PROHIBITION ON INSIDER TRADING. 
‘‘(a) PROHIBITION AGAINST TRADING SECURITIES 
WHILE IN POSSESSION OF MATERIAL, NONPUBLIC INFOR-
MATION.—It shall be unlawful for any person, directly or 
indirectly, to purchase, sell, or enter into, or cause the pur-
chase or sale of or entry into, any security, security-based 
swap, or security-based swap agreement, while in possession 
of material, nonpublic information relating to such secu-
rity, security-based swap, or security-based swap agree-
ment, or relating to the market for such security, security- 
based swap, or security-based swap agreement, if such per-
son knows, or recklessly disregards, that such information 
has been obtained wrongfully, or that such purchase or sale 
would constitute a wrongful use of such information. 
‘‘(b) PROHIBITION AGAINST THE WRONGFUL COMMU-
NICATION OF CERTAIN MATERIAL, NONPUBLIC INFORMA-
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TION.—It shall be unlawful for any person whose own pur-
chase or sale of a security, security-based swap, or entry 
into a security-based swap agreement would violate sub-
section (a) (referred to in this subsection as the ‘commu-
nicating person’), wrongfully to communicate material, 
nonpublic information relating to such security, security- 
based swap, or security-based swap agreement, or relating 
to the market for such security, security-based swap, or se-
curity-based swap agreement, to any other person if— 
‘‘(1) the other person— 
‘‘(A) purchases, sells, or causes the purchase 
or sale of, any security or security-based swap or 
enters into or causes the entry into any security- 
based swap agreement, to which such commu-
nication relates; or 
‘‘(B) communicates the information to an-
other person who makes or causes such a pur-
chase, sale, or entry while in possession of such 
information; and 
‘‘(2) such a purchase, sale, or entry while in pos-
session of such information is reasonably foreseeable. 
‘‘(c) STANDARD AND KNOWLEDGE REQUIREMENT.— 
‘‘(1) STANDARD.—For purposes of this section, 
trading while in possession of material, nonpublic in-
formation under subsection (a) or communicating 
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material nonpublic information under subsection (b) 
is wrongful only if the information has been obtained 
by, or its communication or use would constitute, di-
rectly or indirectly— 
‘‘(A) theft, bribery, misrepresentation, or es-
pionage (through electronic or other means); 
‘‘(B) a violation of any Federal law pro-
tecting computer data or the intellectual prop-
erty or privacy of computer users; 
‘‘(C) conversion, misappropriation, or other 
unauthorized and deceptive taking of such infor-
mation; or 
‘‘(D) a breach of any fiduciary duty, a 
breach of a confidentiality agreement, a breach 
of contract, or a breach of any other personal or 
other relationship of trust and confidence. 
‘‘(2) KNOWLEDGE REQUIREMENT.—It shall not 
be necessary that the person trading while in posses-
sion of such information (as proscribed by subsection 
(a)), or making the communication (as proscribed by 
subsection (b)), knows the specific means by which the 
information was obtained or communicated, or 
whether any personal benefit was paid or promised 
by or to any person in the chain of communication, 
so long as the person trading while in possession of 
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such information or making the communication, as 
the case may be, was aware, consciously avoided 
being aware, or recklessly disregarded that such infor-
mation was wrongfully obtained or communicated. 
‘‘(d) DERIVATIVE LIABILITY.—Except as provided in 
section 20(a), no person shall be liable under this section 
solely by reason of the fact that such person controls or em-
ploys a person who has violated this section, if such control-
ling person or employer did not participate in, profit from, 
or directly or indirectly induce the acts constituting the vio-
lation of this section. 
‘‘(e) EXEMPTED TRANSACTIONS.— 
‘‘(1) IN
GENERAL.—The Commission may, by 
rule or by order, exempt any person, security, or 
transaction, or any class of persons, securities, or 
transactions, from any or all of the provisions of this 
section, upon such terms and conditions as it con-
siders necessary or appropriate, if the Commission 
determines that such action is not inconsistent with 
the purposes of this section. The prohibitions of this 
section shall not apply to any person who acts at the 
specific direction of, and solely for the account of, a 
person whose own securities trading, or communica-
tions of material, nonpublic information, would be 
lawful under this section. 
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‘‘(2) AUTOMATIC TRADING.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of the enactment of this sec-
tion, the Commission shall determine if any 
automatic trading transactions should be ex-
empted from any of the provisions of this section 
and shall make such determination available to 
the public, including on the website of the Com-
mission. 
‘‘(B) INTERIM
APPLICATION.—During the 
period between the date of the enactment of this 
section and the date on which the Commission 
makes a determination pursuant to subpara-
graph (A), automatic trading transactions shall 
be exempted from the provisions of this section. 
‘‘(C) AUTOMATIC
TRADING
TRANSACTION 
DEFINED.—For the purposes of this paragraph, 
the term ‘automatic trading transaction’ means 
any purchase or sale of a security, security-based 
swap, or security-based swap agreement that— 
‘‘(i) occurs automatically; or 
‘‘(ii) is made pursuant to an advance 
election.’’. 
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(b) CONFORMING AMENDMENTS.—The Securities Ex-
change Act of 1934 (15 U.S.C. 78a et seq.) is further amend-
ed— 
(1) in section 21(d)(2), by inserting ‘‘, section 
16A of this title’’ after ‘‘section 10(b) of this title’’; 
(2) in section 21A— 
(A) in subsection (g)(1), by inserting ‘‘and 
section 16A,’’ after ‘‘thereunder,’’; and 
(B) in subsection (h)(1), by inserting ‘‘and 
section 16A,’’ after ‘‘thereunder,’’; and 
(3) in section 21C(f), by inserting ‘‘or section 
16A,’’ after ‘‘section 10(b)’’. 
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Union Calendar No. 172 
116TH CONGRESS 
1ST SESSION 
H. R. 2534 
[Report No. 116–219] 
A BILL 
To amend the Securities Exchange Act of 1934 to 
prohibit certain securities trading and related 
communications by those who possess material, 
nonpublic information. 
SEPTEMBER 27, 2019 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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