H.R. 6320, the “Promoting Transparency Standards for Corporate Insiders Act,” sponsored by Rep. Maxine Waters (D-CA), would continue to allow 10b5-1 plans but would require the SEC to study potential amendments to the 10b5-1 rules. Specifically, the bill would require the SEC to examine the impact of the following changes to the 10b5-1 rules:
- Limiting the creation of 10b5-1 trading plans during insider trading windows;
- Prohibiting multiple, overlapping 10b5-1 plans;
- Implementing a mandatory delay between the adoption of the plan and the first trade;
- Creating rules as to the frequency with which insiders may adopt, modify, or cancel plans;
- Requiring insiders to file trading plan adoptions, amendments, terminations, and transactions with the SEC; and
- Requiring board oversight of 10b5-1 plans, including corporate policies, adoption, and monitoring.
The impact of the above limitations to 10b5-1 plans would be significant, given the prevalence of blackout periods that significantly restrict the ability of key corporate executives and insiders to execute trades. Although Republican leadership in the Senate will not act on bills without significant bipartisan support—especially for financial services issues--heavy bipartisan support in the House is more likely spur Senate activity on the "JOBS & Investor Confidence Act."