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85 Nw. U. L. Rev. 715 (1990-1991)
Recent Insider Trading Developments: The Search for Clarity

handle is hein.journals/illlr85 and id is 733 raw text is: Copyright 1991 by Northwestern University, School of Law Printed in U.S.A. Northwestern University Law Review Vol. 85, No. 3 RECENT INSIDER TRADING DEVELOPMENTS: THE SEARCH FOR CLARITY John F. Olson, John H. Sturc, and Gerald T. Lins* The truth is, that the law is always approaching, and never reaching, con- sistency. It is forever adopting new principles from life at one end, and it always retains old ones from history at the other, which have not yet been absorbed or sloughed off. It will become entirely consistent only when it ceases to grow.1 I. iNTRODUCTION Activities on Wall Street have become front page reading material. The bull market of the 1980s; the development of options, futures, and junk bonds; ever-larger mergers and acquisitions; and the market crash of 1987 combined to make the 1980s one of the most eventful de- cades in the history of Wall Street. These developments, however, were accompanied by one of Wall Street's less-appealing aspects: so-called insider trading. Few securi- ties law violations have ever had the notoriety that insider trading has gained in the past several years.2 It has been the subject of countless newspaper and magazine articles, extensive media coverage, best-selling books, and even motion pictures.3 There is, however, a fundamental problem that troubles both legal theorists and civil libertarians: notwithstanding scores of civil and crimi- nal prosecutions, the United States has no statutory definition of insider trading. Instead, we have experienced nearly fifty years of case law de- * Mr. Olson and Mr. Sturc are partners, and Mr. Lins is an associate, in the Washington, D.C. office of Gibson, Dunn & Crutcher. The authors would like to express their appreciation to Paul Quinn for his assistance in the preparation of this Article. 1 o.W. HoLMES, THE COMMON LAW 36 (1881). 2 See Phillips & Lavoie, The SEC's Proposed Insider Trading Legislation: Insider Trading Con- tros, Corporate Secrecy, and Full Disclosure, 39 ALA. L. Rnv. 439,455 (1988) (No aspect of securi- ties law has attracted more public attention or has created more public condemnation than insider trading.). 3 See, e.g., P. WINANS, TRADING SECRETS (1986); Insider Trading: The Intricate Case of Ellis AG, Bus. WK., Aug. 27, 1990, at 70; Ungeheuer, As Boesky Faces Sentencing, the Insider Trading Probe Rolls On, TIME, Dec. 21, 1987, at 55; Turning Up the Heat on Wall Street; Amid Rising Controversy, the SEC Goes After More Insider Traders, TIME, Dec. 22, 1986, at 52; True Greed, NEWSWEEK, Dec. 1, 1986, at 48; Wall Street (20th Century Fox 1987).

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