Title: 8–K Trading Gap Act of 2019
Policy area: Finance and Financial Sector

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.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2488 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                S. 2488

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.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 17, 2019

Mr. Van Hollen 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.

    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 2019''.

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) 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 et 
                seq.) and 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, or 
                any successor regulation; and
                    ``(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.''.
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