H. R. 6320
IN THE HOUSE OF REPRESENTATIVES
July 10, 2018
Ms. Maxine Waters of California introduced the following bill; which was referred to the Committee on Financial Services
To require the Securities and Exchange Commission to carry out a study of Rule 10b5–1 trading plans, and for other purposes.
This Act may be cited as the
Promoting Transparent Standards for Corporate Insiders Act.
The Securities and Exchange Commission shall carry out a study of whether Rule 10b5–1 (17 C.F.R. 240.10b5–1) should be amended to—
limit the ability of issuers and issuer insiders to adopt a plan described under paragraph (c)(1)(i)(A)(3) of Rule 10b5–1 (
trading plan) when the issuer or issuer insider is permitted to buy or sell securities during issuer-adopted trading windows;
limit the ability of issuers and issuer insiders to adopt multiple, overlapping trading plans;
establish a mandatory delay between the adoption of a trading plan and the execution of the first trade pursuant to such a plan and, if so and depending on the Commission’s findings with respect to subparagraph (A)—
whether any such delay should be the same for trading plans adopted during an issuer-adopted trading window as opposed to outside of such a window; and
whether any exceptions to such a delay are appropriate;
limit the frequency that issuers and issuer insiders may modify or cancel trading plans;
require issuers and issuer insiders to file with the Commission trading plan adoptions, amendments, terminations and transactions; or
require boards of issuers that have adopted a trading plan to—
adopt policies covering trading plan practices;
periodically monitor trading plan transactions; and
ensure that issuer policies discuss trading plan use in the context of guidelines or requirements on equity hedging, holding, and ownership.
In carrying out the study required under paragraph (1), the Commission shall consider—
how any such amendments may clarify and enhance existing prohibitions against insider trading;
the impact any such amendments may have on the ability of issuers to attract persons to become an issuer insider;
the impact any such amendments may have on capital formation;
the impact any such amendments may have on an issuer’s willingness to operate as a public company; and
any other consideration that the Commission considers necessary and appropriate for the protection of investors.
Not later than the end of the 1-year period beginning on the date of the enactment of this Act, the Commission shall issue a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing all findings and determinations made in carrying out the study required under section (a).
After the completion of the study required under subsection (a), the Commission shall, subject to public notice and comment, revise Rule 10b5–1 consistent with the results of such study.