Promoting Transparent Standards for Corporate Insiders Act
Bill: H.R.1528 | Sponsor: Rep. Waters, Maxine (D-CA)
Policy area: Finance and Financial Sector

Summary:
Promoting Transparent Standards for Corporate Insiders Act
This bill directs the Securities and Exchange Commission (SEC) to study and report on possible revisions to limit the ability of issuers of securities and issuer insiders to adopt Rule 10b5-1 trading plans. These plans allow certain employees of publicly traded corporations to sell their shares without violating insider trading prohibitions. The SEC must revise regulations consistent with the results of the study.

To require the Securities and Exchange Commission to carry out a study 
         of Rule 10b5-1 trading plans, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Promoting Transparent Standards for 
Corporate Insiders Act''.

SEC. 2. SEC STUDY.

    (a) Study.--
            (1) In general.--The Securities and Exchange Commission 
        shall carry out a study of whether Rule 10b5-1 (17 CFR 
        240.10b5-1) should be amended to--
                    (A) 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'') to a 
                time when the issuer or issuer insider is permitted to 
                buy or sell securities during issuer-adopted trading 
                windows;
                    (B) limit the ability of issuers and issuer 
                insiders to adopt multiple trading plans;
                    (C) 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)--
                            (i) 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
                            (ii) whether any exceptions to such a delay 
                        are appropriate;
                    (D) limit the frequency that issuers and issuer 
                insiders may modify or cancel trading plans;
                    (E) require issuers and issuer insiders to file 
                with the Commission trading plan adoptions, amendments, 
                terminations and transactions; or
                    (F) require boards of issuers that have adopted a 
                trading plan to--
                            (i) adopt policies covering trading plan 
                        practices;
                            (ii) periodically monitor trading plan 
                        transactions; and
                            (iii) ensure that issuer policies discuss 
                        trading plan use in the context of guidelines 
                        or requirements on equity hedging, holding, and 
                        ownership.
            (2) Additional considerations.--In carrying out the study 
        required under paragraph (1), the Commission shall consider--
                    (A) how any such amendments may clarify and enhance 
                existing prohibitions against insider trading;
                    (B) the impact any such amendments may have on the 
                ability of issuers to attract persons to become an 
                issuer insider;
                    (C) the impact any such amendments may have on 
                capital formation;
                    (D) the impact any such amendments may have on an 
                issuer's willingness to operate as a public company; 
                and
                    (E) any other consideration that the Commission 
                considers necessary and appropriate for the protection 
                of investors.
    (b) Report.--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).
    (c) Rulemaking.--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.

            Passed the House of Representatives April 20, 2021.

            Attest:

                                             CHERYL L. JOHNSON,

                                                                 Clerk.