Former "Sheriff of Wall Street" Eliot Spitzer told CNBC on Monday that a law defining insider trading should be passed.
"I think it is time for a statutory definition of insider trading," the former New York attorney general and governor said. "[In] tipper-tippee liability, there's this area of ambiguity. That's not good. We need certainty and clarity so people know what the rules are."
In a landmark ruling last month, a federal appeals court overturned the convictions of two former hedge fund managers charged with making illegal trades in technology stocks. The ruling held that prosecutors needed to prove a trader knew the original source of nonpublic information received a benefit in exchange for the tip.
"[In] tipper, tippee liability there's this area of ambiguity. That's not good. We need certainty and clarity so people know what the rules are," Spitzer said Monday in a " Squawk Box " interview.
"Define the lines and then play by that line. That's it. It's very simple," he continued. "We don't need regulations. We don't need uncertainty. Establish a bright line and live by it."
Spitzer resigned as governor in 2008 amid a prostitution scandal.
-Reuters contributed to this report.