IIB 
116TH CONGRESS 
1ST SESSION H. R. 2534 
IN THE SENATE OF THE UNITED STATES 
DECEMBER 9, 2019 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
To amend the Securities Exchange Act of 1934 to prohibit 
certain securities trading and related communications by 
those who possess material, nonpublic information. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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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 AWARE
OF MATERIAL, NONPUBLIC INFORMA-
TION.—It shall be unlawful for any person, directly or in-
directly, 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 aware of 
material, nonpublic information relating to such security, 
security-based swap, or security-based swap agreement, or 
any nonpublic information, from whatever source, that 
has, or would reasonably be expected to have, a material 
effect on the market price of any such security, security- 
based swap, or security-based swap agreement, if such 
person knows, or recklessly disregards, that such informa-
tion has been obtained wrongfully, or that such purchase 
or sale would constitute a wrongful use of such informa-
tion. 
‘‘(b) PROHIBITION AGAINST THE WRONGFUL COM-
MUNICATION OF CERTAIN MATERIAL, NONPUBLIC INFOR-
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MATION.—It shall be unlawful for any person whose own 
purchase or sale of a security, security-based swap, or 
entry into a security-based swap agreement would violate 
subsection (a), wrongfully to communicate material, non-
public information relating to such security, security-based 
swap, or security-based swap agreement, or any nonpublic 
information, from whatever source, that has, or would rea-
sonably be expected to have, a material effect on the mar-
ket price of any 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 pur-
chase 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 
communication relates; or 
‘‘(B) communicates the information to an-
other person who makes or causes such a pur-
chase, sale, or entry while aware of such infor-
mation; and 
‘‘(2) such a purchase, sale, or entry while aware 
of such information is reasonably foreseeable. 
‘‘(c) STANDARD AND KNOWLEDGE REQUIREMENT.— 
‘‘(1) STANDARD.—For purposes of this section, 
trading while aware of material, nonpublic informa-
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tion under subsection (a) or communicating material 
nonpublic information under subsection (b) is wrong-
ful only if the information has been obtained by, or 
its communication or use would constitute, directly 
or indirectly— 
‘‘(A) theft, bribery, misrepresentation, or 
espionage (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 in-
formation; or 
‘‘(D) a breach of any fiduciary duty, a 
breach of a confidentiality agreement, a breach 
of contract, a breach of any code of conduct or 
ethics policy, or a breach of any other personal 
or other relationship of trust and confidence for 
a direct or indirect personal benefit (including 
pecuniary gain, reputational benefit, or a gift of 
confidential information to a trading relative or 
friend). 
‘‘(2) KNOWLEDGE REQUIREMENT.—It shall not 
be necessary that the person trading while aware of 
such information (as proscribed by subsection (a)), 
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or making the communication (as proscribed by sub-
section (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 aware of such in-
formation or making the communication, as the case 
may be, was aware, consciously avoided being aware, 
or recklessly disregarded that such information was 
wrongfully obtained, improperly used, or wrongfully 
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 
employs a person who has violated this section, if such 
controlling person or employer did not participate in, or 
directly or indirectly induce the acts constituting a viola-
tion of this section. 
‘‘(e) AFFIRMATIVE DEFENSES.— 
‘‘(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-
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siders necessary or appropriate in furtherance of the 
purposes of this title. 
‘‘(2) DIRECTED TRADING.—The prohibitions of 
this section shall not apply to any person who acts 
at the specific direction of, and solely for the ac-
count of another person whose own securities trad-
ing, or communications of material, nonpublic infor-
mation, would be lawful under this section. 
‘‘(3) 
RULE
10b–5–1
COMPLIANT
TRANS-
ACTIONS.—The prohibitions of this section shall not 
apply to any transaction that satisfies the require-
ments of Rule 10b–5–1 (17 CFR 240.10b5–1), or 
any successor regulation.’’. 
(b) COMMISSION REVIEW OF RULE 10b–5–1.—Not 
later than 180 days after the date of the enactment of 
this Act, the Securities and Exchange Commission shall 
review Rule 10b–5–1 (17 CFR 240.10b5–1) and make any 
modifications the Securities and Exchange Commission 
determines necessary or appropriate because of the 
amendment to the Securities Exchange Act of 1934 made 
by this Act. 
(c) CONFORMING
AMENDMENTS.—The Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is further 
amended— 
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