U.S. SEC to Tighten Insider Trading Rules, Boost Money Market Fund Resilience

The Securities and Exchange Commission (SEC) recommended tightening a legal safe-harbor that permits corporate insiders to trade in a company’s shares, as well as other measures to make money market funds more resilient.

The reforms, which are open to public comment, would affect a wide range of businesses in the United States, from publicly traded firms and their top executives to banking groups and asset managers such as BlackRock, Vanguard, Fidelity, and Goldman Sachs.

The proposal from Wednesday compels executives to reveal their plans and any adjustments they make. The SEC also wants a 120-day “cooling-off” period between the approval of a plan and the first trade for executives. The cooling-off period for corporations trading their securities would be 30 days.

“There is accumulating evidence that these plans are being exploited to benefit corporate insiders, at best, in ways that they were not meant to be utilized in,” Taylor said.

In contrast to the current quarterly disclosure regulation, the SEC wants corporations to disclose share buybacks one business day after they are executed.

Investor groups well received the revisions.