The Securities and Exchange Commission chair is Gary Gensler.
Evan Vucci.
Corporate executives who are often unaware of non-public information could be limited in how they can sell their own company shares under proposed changes to the SEC's insider-trading regulations.
Under 10b5-1 plans, executives are allowed to schedule stock sales days ahead of time. Two decades ago, the plans were supposed to allow executives to sell stock without being accused of insider trading.
More than half of S&P 500 companies have enacted 10b5-1 plans, and it has grown more popular. Critics say the plans have been abused, allowing insiders to dump shares ahead of announcements. There is no requirement for executives to reveal their plans.
Elizabeth Warren and others have called on the SEC to change 10b5-1 plans, claiming that corporate chiefs can bag profits with privileged knowledge that everyday retail traders don't have, and that it undermines public confidence in the market.
Gary Gensler acknowledged the problems in a press release. "Over the past two decades, we've heard concerns about and seen gaps in Rule 10b5-1 that today's proposal would help fill."
The SEC proposed amendments to Rule 10b5-1 that would require company insiders to wait about four months between scheduling a trade and selling their stock.
The proposed amendments would limit single-trade plans to one per year. Executives would have to attest that they were unaware of any non-public information when they made trades.
The SEC will now seek public comment.
Business Insider has an original article.
