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Waters Applauds SEC Response to H.R. 1528 “Promoting Transparent Standards for Corporate Insiders Act” and Other Committee Recommendations to Protect Investors and Strengthen Market and Corporate Integrity

day, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, released the following statement in response to Securities and Exchange Commission’s (SEC) December 15, 2021 rule proposals.

“I am pleased that the SEC has proposed rules that incorporate recommendations from my bill, the “Promoting Transparent Standards for Corporate Insiders Act,” which passed the House with bipartisan support and requires the SEC to review and revise its rules to limit the ability of corporate insiders’ unscrupulous use of 10b5-1 trading plans. These plans allow certain employees of publicly traded corporations to sell their shares without violating insider trading prohibitions. 

“Like my bill, the unanimous action by the SEC—under the able leadership of Chair Gary Gensler—proposes to limit the abuses and misuses of 10b5-1 plans. These plans permit corporate insiders to sell or buy shares of the company for which they work but can also enable insiders from trading on material non-public information by strategically creating many of these plans and layering their execution or cancellations to the benefit of the insider executives.”  

“While new disclosure requirements and cooling off periods as proposed yesterday are steps in the right direction, I encourage the SEC to not become overly reliant on disclosure to cure these anti-investor practices that aim to circumvent insider trading rules. The SEC, in the final rule, should aim to prohibit practices of executives who strategically and opportunistically abuse and misuse 10b5-1 plans and should, in addition to the executives involved in the trades, also hold the compliance personnel who rubber stamp and greenlight these trades responsible for the abuse.”

“Additionally, I would like to commend the SEC’s proposals to enhance disclosures related to stock buybacks and improve its oversight of the securities-based swaps markets. Under my leadership, the House Financial Committee has focused on these actions for years and has held several hearings on stock buybacks, including on how these practices often lack transparency and are often abused by corporate insiders; come at the expense of workers’ wages and the investing public; and exacerbate inequality. As the Commission looks to finalize the enhanced disclosure on stock buybacks, the Commission should require that issuers explain how the decision to engage in stock buybacks would affect workers' wages and human capital development. The SEC’s proposals for security-based swaps, which are complex financial products that were at the heart of the Archegos scandal early last year, builds on my Committee’s legislative record on the topic and the legislation we passed to increase transparency of the practices that led to the collapse of Archegos and billions in lost investments. SEC’s proposals are on-point and should be approved promptly. I look forward to working closely with Chair Gensler as we ensure that our markets serve the interests of working families and retirees.”


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