Federal securities regulators embarked on a wave of rule-making on Wednesday, including new proposals related to executive share trading and corporate share buybacks.
Why is this important: It looked like a giant clearing of the throat, as the SEC prepares to address issues like crypto and PSPCs in 2022.
- Next year could also see new disclosure requirements related to climate risk, cybersecurity risk and human capital management.
Insider trading: The SEC wants to tighten the 10b5-1 rule, which allows plans to sell stocks pre-approved by senior executives. These transactions reached new heights in 2021.
- The 10b5-1 rule was designed to prevent insiders from trading important information, but it does not. The SEC’s proposal would require that a trading plan be in place for at least 120 days before actual sales can take place, and also for greater disclosure.
- It should also be noted that on the same day the SEC sought to crack down on sales by business executives, House Speaker Nancy Pelosi said publicly that Congress will continue to look the other way when it comes to its own members.
Share buybacks: The SEC wants companies to disclose share buybacks within one business day and also explain “the purpose or rationale for share buybacks and the process or criteria used to determine the buyback amount.”
- Visa announced yesterday that its board of directors has approved a $ 12 billion share buyback program. Overall, corporate share buybacks continue for a record year.
The SEC also proposed new money market rules, in which it would increase liquidity requirements and buffers, and new disclosure requirements on securities swaps.
The bottom line: Gary Gensler is just getting started.