Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—Insider trading bill addresses President’s attempt to sell early access to social media posts, (Aug 11, 2026)
The bill’s sponsors believe the legislation would “make it obvious” that selling early access to Truth Social messages is insider trading.
Newly introduced legislation from Senator Jack Reed (D-RI), a member of the Senate Banking Committee, seeks to provide a clear definition of insider trading under federal law at a time when the President is pushing the boundaries of the existing regulations. In a press release, Sen. Reed said that the bill “makes it obvious that President Trump’s scheme to sell a $100,000 monthly subscription service to provide earlier access to the President’s Truth Social posts is, by definition, insider trading.”
Calling the President’s proposal “unethical” and “illegal,” Sen. Reed and several co-sponsors developed The Insider Trading Prohibition Act (S. 5320). The bill would clearly define insider trading and remove some of the uncertainty that has hindered regulators’ ability to pursue and prosecute insider trading cases effectively.
No federal statute. There currently is no federal statute that specifically bans insider trading. Instead, it is enforced as a type of securities fraud under the 1934 Act. Insider trading is subject to judicial interpretation, Sen. Reed noted, and leaving it to be defined on a case-by-case basis has resulted in an unnecessarily complex and inconsistent legal standard.
To illustrate that point, Sen. Reed cited comments from Columbia Law School Professor John Coffee, Jr. who said that because insider trading is a judge-made law, inconsistencies among the U.S. circuit courts are inevitable where there is no definitive statutory text to provide precise guidance.
Sen. Reed noted that the legislation would finally distill insider trading to clear bright line rules. “Simply put, if a person trades a security on the basis of information that the person is aware is material and nonpublic and is aware was wrongfully obtained, then that person has engaged in unlawful insider trading,” he said in a statement on the Senate floor.
Bill’s provisions. The proposed legislation would make it unlawful for a person to trade while aware of material, non-public information if that person knows, or has reason to know, that the information was obtained wrongfully, such as through theft, bribery, hacking, misappropriation, or a breach of a fiduciary duty for a personal benefit.
The bill also would prohibit those with material, nonpublic information from wrongfully passing along that information to others if the person is aware that the communication would result in trading, and the recipient does trade based on that communication.
The legislation is cosponsored by U.S. Senators Chris Van Hollen (D-MD), Andy Kim (D-NJ), Angela Alsobrooks (D-MD), and Lisa Blunt Rochester (D-DE).
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