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H.R. 4335: 8-K Trading Gap Act of 2019


The text of the bill below is as of Sep 16, 2019 (Introduced).


I

116th CONGRESS

1st Session

H. R. 4335

IN THE HOUSE OF REPRESENTATIVES

September 16, 2019

introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to issue rules that prohibit officers and directors of certain companies from trading securities in anticipation of a current report, and for other purposes.

1.

Short title

This Act may be cited as the 8–K Trading Gap Act of 2019.

2.

Prohibition on certain trading in anticipation of a current report

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 10D the following:

10E.

Prohibition on certain trading in anticipation of a current report

(a)

Prohibition

Not later than 1 year after the date of enactment of this section, the Commission shall issue rules that require each issuer that is subject to reporting requirements under section 13(a) or 15(d) to establish and maintain policies, controls, and procedures that are reasonably designed to prohibit executive officers and directors of the issuer from purchasing, selling, or otherwise transferring any equity security of the issuer, directly or indirectly—

(1)

with respect to an event described in sections 1 through 6 of Form 8–K, between—

(A)

the occurrence of such event; and

(B)

the filing or furnishing of a current report on Form 8–K with respect to such event; and

(2)

with respect to an event described in section 7 or 8 of Form 8–K, between—

(A)

the date on which the issuer determines that it will disclose such event; and

(B)

the filing or furnishing of a current report on Form 8–K with respect to such event.

(b)

Permissible transactions

In issuing rules under subsection (a), the Commission—

(1)

may exempt certain transactions that the Commission determines is appropriate, including those that—

(A)

occur automatically;

(B)

are made pursuant to an advance election; or

(C)

except as provided in paragraph (2), involve a purchase or sale of equity securities that satisfies the conditions under section 240.10b5–1(c) of title 17, Code of Federal Regulations; and

(2)

may not exempt from those rules a transaction made by an executive officer or director of an issuer under a plan that—

(A)

is described in section 240.10b5–1(c)(1)(i)(A)(3) of title 17, Code of Federal Regulations; and

(B)

was adopted—

(i)

with respect to an event described in sections 1 through 6 of Form 8–K, between—

(I)

the occurrence of such event; and

(II)

the filing or furnishing of a current report on Form 8–K with respect to such event; and

(ii)

with respect to an event described in section 7 or 8 of Form 8–K, between—

(I)

the date on which the issuer determines that it will disclose such event; and

(II)

the filing or furnishing of a current report on Form 8–K with respect to such event.

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