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S. 2360: 8–K Trading Gap Act of 2021


The text of the bill below is as of Jul 15, 2021 (Introduced).


II

117th CONGRESS

1st Session

S. 2360

IN THE SENATE OF THE UNITED STATES

July 15, 2021

introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

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 2021.

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 (15 U.S.C. 78j–4) 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 any of sections 1 through 6 of Form 8–K, during the period beginning on the date on which the event occurs and ending on the date on which the issuer files or furnishes a current report on Form 8–K with respect to the event; and

(2)

with respect to an event described in section 7 or 8 of Form 8–K, during the period beginning on the date on which the issuer determines that the issuer will disclose the event and ending on the date on which the issuer files or furnishes a current report on Form 8–K with respect to the event.

(b)

Permissible transactions

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

(1)

may exempt from those rules certain transactions as the Commission determines to be appropriate, including those transactions 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;

(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, during the period beginning on the date on which the event occurred and ending on the date on which the issuer files or furnishes a current report on Form 8–K with respect to the event; and

(ii)

with respect to an event described in section 7 or 8 of Form 8–K, during the period beginning on the date on which the issuer determines that the issuer will disclose the event and ending on the date on which the issuer files or furnishes a current report on Form 8–K with respect to the event; and

(3)

shall exempt from those rules—

(A)

issuers that are required to adopt and administer a code of ethics under section 270.17j–1 of title 17, Code of Federal Regulations, and any other issuer registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.), the investment advisers of which are required to adopt and administer a code of ethics under section 275.204A–1 of title 17, Code of Federal Regulations; and

(B)

any event—

(i)

that is described in any of sections 1 through 6 of Form 8–K; and

(ii)

with respect to which the issuer has announced the event in a press release or other method of dissemination that complies with the requirements of section 243.101(e)(2) of title 17, Code of Federal Regulations.

(c)

Rule of construction

Any reference in this section to a rule, including any reference to Form 8–K, shall be construed to refer to that rule, including that version of Form 8–K, as in effect on the date of enactment of this section.

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