Securities Law Commons^™

Plugging Leaks And Lowering Levees In The Federal Government: Practical Solutions For Securities Trading Based On Political Intelligence, Donna M. Nagy, Richard Painter

Articles by Maurer Faculty

From its founding, the federal government of the United States has been a potential gold mine for nonpublic market-moving information. By selectively disclosing this information to securities traders outside the government (or to persons who advise them), federal officials can substantially privilege certain wealthy or otherwise well-connected investors over ordinary investors in the securities market. The trading profits that can be derived from the use of this material nonpublic government information are often tremendous.

This disparity of access to government information may be unfair. But absent an identifiable personal benefit on the part of the government insider, neither the selective …

Selective Disclosure By Federal Officials And The Case For An Fgd (Fairer Government Disclosure) Regime, Donna M. Nagy, Richard W. Painter

Articles by Maurer Faculty

This Article addresses a problem at the intersection of securities regulation and government ethics: the selective disclosure of market-moving information, by federal officials in the executive and legislative branches, to securities investors outside the government who use that information for trading. These privileged investors, often aided by political intelligence consultants, can profit substantially from their access to knowledgeable sources inside the government. In most instances, however, neither the disclosure nor the trading violates the antifraud provisions of the federal securities laws (under which the insider trading prohibitions arise). This legally protected favoritism undermines investor confidence in the fairness and integrity …