Is there any special statute that defines insider trading?
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UPDATED: Aug 9, 2013
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Not really. The rules prohibiting insider trading were largely made by the SEC and the courts. The SEC first identified insider trading as a type of securities fraud coming within its broad rules defining and prohibiting manipulative and deceptive acts in 1961.
There are two bases for holding parties responsible for insider trading. The “special relationship” or “classical” theory is that an insider, because of his or her special relationship to the company, owes a fiduciary duty to the company’s shareholders not to trade on insider information for personal gain. The “misappropriation theory” does not focus on the insider’s duty to the company, but on the basis that if the trader obtained the information as a result of a breach of any fiduciary duty to the company, there is liability.
In addition to the classic insider, such as corporate officers and directors, insider liability may be asserted against others who gain access to insider information, such as a person who receives a “tip” from an insider, attorneys, accountants and printers who have access to that information.
In addition to being illegal under the Securities Laws, insider trading is often attacked criminally under the Federal mail fraud and wire fraud statutes. (For an excellent book on the subject, the 1,237 page Insider Trading by William S. K. Wang and Marc I. Steinberg was published by Little, Brown & Company in 1997.)