Though scholarly debates continue, the impact of credit derivatives on the law and policy of insider trading is still unexplored. This Article fills this gap to demonstrate that the emergence of credit derivatives marks a profound development for the prohibition against insider trading. It argues that the growth of credit derivatives problematizes traditional insider trading jurisprudence like never before. With the feasibility of current rules subject to question, this Article advocates for a radical rethinking of the present regulatory framework for one better suited to modern markets.

These loopholes are bad policy even in the best of circumstances, but it would be unconscionable to allow them to continue if we can use revenue from closing them to avoid the devastating effect sequestration would have on national security, homeland defense, law enforcement, public safety, education and other important priorities. Sen. Carl Levin (D-MI).