8-K Trading Gap Act of 2019

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 15 U.S.C. 78j–4 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) subject to subsection (b)(3)(C), 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, or any successor regulation; (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, or any successor regulation; 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, or any successor regulation; (B) any other issuer that is registered under the Investment Company Act of 1940 ( 15 U.S.C. 80a–1 (C) 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 method of public disclosure described in section 243.101(e)(2) of title 17, Code of Federal Regulations, or any successor regulation. (c) Rule of construction Any reference in this section to a section of Form 8–K shall be construed to refer to that section of Form 8–K as in effect on the date of enactment of this section. .

Summary: 8–K Trading Gap Act of 2019 This bill requires certain issuers of securities to create policies reasonably designed to prevent executive officers and directors from trading their securities after a significant corporate event but before disclosing that event through a public filing. Certain issuers required by regulation to adopt a code of ethics are exempt from this requirement.