US SEC to tighten insider trading rules, propose changes to money market funds

Washington - Progressive groups have urged the SEC to improve the resilience of the market, including adjusting the value of the fund based on trading activity

The United States Securities and Exchange Commission (SEC) will propose on Wednesday to tighten safe-haven law allowing corporate insiders to trade the company’s shares, as well as other rules aimed at improving the resilience of companies. money market funds.

The agency will also come up with rules to address issues highlighted by the collapse of New York’s Archegos family office earlier this year.

The slew of long-awaited proposed rules will mark a milestone for SEC Chairman Gary Gensler, who has pledged an ambitious agenda since joining the Wall Street watchdog in April.

The proposed tightening of the trading plans of “10b5-1” companies in particular will be applauded by progressives who have long said the current rules are too loose, allowing insiders to play with the system and reap bargains at the expense of investors. ordinary.

The plans currently allow insiders to execute trades in the company’s shares on a predetermined future date, providing legal protection against potential allegations of insider trading on material non-public information.

Critics say, however, that it’s far too easy to pass, change, or roll back transactions with little control.

Wednesday’s proposal should force leaders to disclose those plans and any changes, none of which are uniformly required, according to academics and advocates who pushed for the changes.

Democrat-appointed commissioner Caroline Crenshaw also said she supported a so-called “cooling off period” of at least four to six months between the adoption of a rule 10b5-1 plan and the first exchange under the plan.

Wednesday’s meeting will also focus on how to correct systemic risks in trillion-dollar US money market funds, which were bailed out for the second time as investors fled these vehicles during pandemic-induced turmoil. from 2020.

Progressive groups have urged the SEC to improve the resilience of the market, including adjusting the value of the fund based on trading activity to pass costs on to redeeming investors, known as “swing pricing.”

Reuters