On the recordDecember 5, 2019
I strongly oppose Representative Huizenga's amendment that replaces the bill's standard of illegal insider trading while ``aware of'' material, nonpublic information with trading while ``using'' material, nonpublic information. This narrower standard is inconsistent with current law, would severely weaken the bill, and would create substantial enforcement hurdles to the benefit of bad actors and to the detriment of the SEC. If the amendment is adopted, the SEC would have to prove that the reason the defendant traded was because of a specific piece of information. That means that the SEC would have a hard time proving its case in court unless it had an email from a defendant explaining his motive for trading. Not many bad actors engaging in illegal insider trading are that dumb. Moreover, such a change would benefit insider traders at hedge funds or other market intelligence firms because they would merely have to tell the judge that they had other reasons or data to support their trade. The SEC's existing rule 10b-5 clearly states that the appropriate standard is awareness. Changing it to ``use,'' as Representative Huizenga's amendment would do, dramatically and substantially weakens the SEC's authority to prosecute insider trading. Mr. Chair, I urge my colleagues to reject the amendment offered by Mr. Huizenga. Mr. Chair, I yield the balance of my time to the gentleman from Connecticut (Mr. Himes), the sponsor of this important legislation.
