SEC Clarifies Rules on Insider Trading

In a pair of separate votes on Thursday, the Securities and Exchange Commission clarified two provisions of insider-trading laws.

In the first, the commission ruled that a person is considered to be breaking the law if he is “aware” that he has inside information when he makes a securities trade.

Courts have been split on whether insider trading liability requires trading while in “knowing possession” of nonpublic information, or proof that the trader “used” the information in trading.

In the second change, the SEC clarified rules under which the relative of someone with inside information--such as the spouse of an attorney working on a merger deal--would be liable for trading on that information.