The Securities and Exchange Commission (SEC) is considering the first major rule changes in 20 years on insider trading of stocks, Chairman Gary Gensler said in a video broadcast on Wednesday
WASHINGTON (Pakistan Point News / Sputnik - 09th June, 2021) The Securities and Exchange Commission (SEC) is considering the first major rule changes in 20 years on insider trading of stocks, Chairman Gary Gensler said in a video broadcast on Wednesday.
Gensler referred to the SEC's intent to revise rules on the controversial "10b5-1 plans" used now by company executives to avoid insider-trading claims when buying or selling their own stock.
"In my view, these plans have led to real cracks in our insider trading regimes, thus our staff have to make recommendations for the commission's consideration and how we might freshen up, after 20 years, rules on 10b5-1 plans," Gensler said.
While the 10b5-1 plans stop insiders from changing or adopting a planned purchase or sale if they are in possession of material nonpublic information, there was no timeframe set for this, he said.
"As a result, insiders can cancel plans when they actually do have material nonpublic information. This seems kind of upside down today" to what the rules were originally meant, Gensler added.
Aside from the limitations on the canceling of 10b5-1 plans, Gensler proposed a mandatory 4-6 month "cooling-off" period, limitations on the number of such plans that could be deployed in one instance and additional disclosure requirements.
