The current insider trading prohibition requires the government to prove that a defendant breached a fiduciary duty, or other duty of trust and confidence, by using or tipping the information for personal profit. The S.E.C. and prosecutors have at times had to stretch to find a relationship close enough to show that a defendant breached a duty by trading on confidential information.

For example, in a recent settlement, the S.E.C. accused a defendant of being a guest in the home of a longtime friend and surreptitiously viewing documents about an impending merger, which resulted in profits of more than $250,000. Is friendship enough of a relationship to prove a breach of a duty of trust and confidence?

Under the new legislation, it would appear it would be. The bill would make it a violation to trade while in possession of material, nonpublic information “if such person knows, or recklessly disregards, that such information has been obtained wrongfully, or that such purchase or sale would constitute a wrongful use of such information.” That would make it easier to use circumstantial evidence to show that a defendant knew, or at least turned a blind eye, to the source of the information. The bill would also make it a violation for a person “wrongfully to communicate” confidential information if it was “reasonably foreseeable” that the recipient, known as a tippee, would trade on it.

The legislation also would move insider trading law away from its focus on a duty to keep information confidential by more broadly describing what constituted “wrongful” trading or transmission of confidential information. There would be four ways to show that the information had been obtained wrongfully: by theft, bribery or espionage; by violation of any federal law protecting computer data; by conversion, misappropriation or unauthorized and deceptive taking of information; and by breach of a fiduciary duty or breach of “any other personal or other relationship of trust and confidence.”

All that is quite broad, and would make it easier to prove a violation.

By including a breach of a federal data privacy law or even just theft of information, insider trading law would cover hackers who obtained information before its release to the public. The S.E.C. recently filed a case against nine defendants for hacking into the agency’s computer system to obtain information before its release to the public, resulting in at least $4.1 million in profits.