(Reuters) – The US Securities and Exchange Commission on Wednesday proposed tightening a legal safe haven that allows corporate insiders to trade in a company's shares and other rules to improve the resilience of money market funds. also unveiled measures to increase transparency around stock repurchases and the complex derivatives at the heart of the New York-based Archegos' meltdown earlier this year.
The amount of change awaits marks a milestone for SEC President Gary Gensler, who has described an ambitious agenda to crack down on corporate misconduct and address market injustices since joining the Wall Street Watchdog in April.
The changes, which are subject to consultation, will affect some of America's companies, from listed companies and their tops. executives, to banking groups and asset managers including BlackRock, Vanguard, Fidelity and Goldman Sachs.
The proposed tightening of "1
The plans allow insiders to trade in the company's shares. at a predetermined future date, providing legal protection against potential allegations of insider dealing in material non-public information. Critics say it's far too easy to adopt, change or suspend business with little scrutiny.
Wednesday's proposal requires executives to disclose these plans and any changes, which are not currently required. For executives, the SEC also wants a "cooling-off period" of 120 days between the adoption of a plan and the first trade. For companies trading in their own securities, the proposal would set a 30-day withdrawal period.
The proposal would also prevent insiders from having several overlapping plans, which Mr. Gensler said can allow insiders to choose advantageous plans that they thank.
While critics have long said the plans are flawed, renewed business conducted by executives at Pfizer and Moderna during the covid-19 vaccine development process re-examined such plans and highlighted transparency issues, says Daniel Taylor at the University of Pennsylvania & # 39 ;s Wharton School.
"There is growing evidence that these plans are at best used in a way they were not intended for and at worst abused for. to enrich corporate insiders, "he said.
Separately. , the agency also said it wants companies to disclose share repurchases one business day after a trade is completed, as opposed to the current quarterly disclosure rule.
“These issues speak to the confidence e that investors have in the markets. "Whenever we can increase investor confidence in the markets, it's good," said Gensler.
The agency also detailed changes to address systemic risks in the US $ 5 trillion money market sector, which were saved for a second time when investors fled these vehicles during the pandemic-induced turbulence of 2020.
Regulators have struggled for years to get a grip on the sector, which critics say now enjoys an implicit government guarantee.
On Wednesday, the SEC proposed new liquidity requirements, the abolition of redemption fees and restrictions and the adjustment of funds' value in line with trading activity to transfer costs to redemption investors. called "swing pricing." fraudulent, deceptive or manipulative behavior via security-based swaps.
Such privately traded derivatives were at the heart of Archego's meltdown, leaving the Wall Street banks on the other side of Family Office's business with losses of $ 10 billion.
Under the new rule, investors must publish such trades.