8–K Trading Gap Act of 2021
Bill: S.2360 | Sponsor: Sen. Van Hollen, Chris (D-MD)
Policy area: Finance and Financial Sector

Summary:
8–K Trading Gap Act of 2021
This bill requires certain publicly traded companies 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 companies required by regulation to adopt a code of ethics are exempt from this requirement.

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.

    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 ``8-K Trading Gap Act of 2021''.

SEC. 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:

``SEC. 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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