Back in January, CFTC Chairman Gary Gensler said it was the CFTC’s position that the insider trading laws in the securities world should be expanded to the futures world, making it illegal to trade on non-public information from agencies like the U.S. Treasury, Federal Reserve and Department of Agriculture. Gensler cited the movie “Trading Places” to explain why such an expansion of the law should occur. As you may recall from the movie, Billy Ray and Winthrop intercepted the confidential Department of Agriculture “crop report” on orange crop forecasts, and used it to successfully sell short and corner the orange juice futures market before the report was publicly announced (and to simultaneously ruin the Duke brothers, who lost $394 million based on a false copy of the report). Gensler said that in real life, such trading based on “misappropriated government information is actually not illegal under our statute,” but should be in the CFTC's view.

In March, Gensler promised that the CFTC would provide language to the Senate to include in its financial reform legislation, and the FT reported today that when President Obama signed the final bill this week, it included the "Eddie Murphy Rule" sought by Gensler. Although I was unable to find the specific section of the statute (can anyone point it out to me?), the FT reports that the new law bans insider trading using non-public information from government sources. [UPDATE: Russ Ryan of King & Spalding has kindly pointed out that the Eddie Murphy Rule can be found in Section 746 of Dodd-Frank).

Beyond pleasing Trading Places lovers, however, it is unclear what the Eddie Murphy Rule will really accomplish. Agricultural analysts say that the chance of Trading Places-style insider trading happening outside of the movies is extremely slim. “I know of no instances of this happening in real life,” says Rich Nelson, director of research at Allendale, Inc.