Amends the Securities Exchange Act of 1934 to prohibit any person from trading in securities on the basis of material, nonpublic information or from selectively disclosing such information in a manner likely to lead to trading. Establishes the liability of a person who violates such prohibition based on: (1) a preponderance of the evidence that such person knew, or was reckless in not knowing, that the information was material and nonpublic and that its disclosure was likely to lead to trading; or (2) proof by the plaintiff that such person knew, or was reckless in not knowing, that the information was provided or obtained through a breach of a contractual, fiduciary, or other legal duty or that such person used the information in a knowing breach of such a duty.
Establishes equal liability for any entity who controlled such person, unless: (1) such entity proves that it reasonably did not know that such person traded on the basis of, or tipped, material, nonpublic information; or (2) such entity established and complied with procedures reasonably expected to prevent and detect such a violation without finding reasonable cause to believe a violation had occurred.
Introduced in Senate
Read twice and referred to the Committee on Banking.
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