Legislation sharply increasing penalties on stock market traders who use inside information to gain unfair advantage passed the House yesterday without opposition. The Senate has not yet considered the bill.

The Securities and Exchange Commission would be authorized to ask a court for up to three times the amount of profit gained or loss avoided by anyone buying or selling securities while in possession of material nonpublic information. Currently, a person caught in an inside trade can only be required to give up the actual amount won or preserved from loss. The maximum fine for a criminal violation of the same law would be raised tenfold to $100,000.

This would be the first stiffening of penalties in 50 years, a move deemed necessary by the SEC, which has stepped up its campaign to curb the practice.

Insider trading has grown tremendously in the past few years in connection with the larger number of mergers and tender offers taking place and also with the development of the options market. Advance knowledge of an event or situation, such as a profit or loss forecast or an oil discovery, that could cause a stock to skyrocket or plunge can result in spectacular profits or avoidance of losses for the person who acts before the average investor gets word of it. Such action can undermine public confidence in the markets.

The law applies to underwriters, investment analysts, lawyers, accountants and others who may have access to inside information. One famous case involved a printer of financial documents who used the information to turn a tidy profit before being discovered.

But, to satisfy concerns of the securities industry, the original draft was altered to apply penalties only to traders and tipsters, persons who actually engage in insider trading or pass the information on to others who do so for profit. Broker-dealers who employ or control inside traders, as well as those who execute such trades, would be exempted from triple penalties, even though they know the information is not public. There is a five-year statute of limitations.