Prohibition on certain trading in anticipation of a current report

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 10D (15 U.S.C. 78j–4) the following:

10E.

Prohibition on certain trading in anticipation of a current report

(a)

Prohibition

Not later than 1 year after the date of enactment of this section, the Commission shall issue rules that require each issuer that is subject to reporting requirements under section 13(a) or 15(d) to establish and maintain policies, controls, and procedures that are reasonably designed to prohibit executive officers and directors of the issuer from purchasing, selling, or otherwise transferring any equity security of the issuer or interest in an equity security of the issuer, directly or indirectly—(1)with respect to an event described in any of sections 1 through 6 of the form described in section 249.308 of title 17, Code of Federal Regulations (referred to in this section as Form 8–K), between—(A)the occurrence of that event; and(B)the filing or furnishing of a current report on Form 8–K with respect to that event; and(2)with respect to an event described in section 7 or 8 of Form 8–K, between—(A)the date on which the issuer determines that the issuer will disclose that event; and(B)the filing or furnishing of a current report on Form 8–K with respect to that event.(b)

Permissible transactions

In issuing rules under subsection (a), the Commission—(1)may exempt certain transactions that the Commission determines are appropriate, including those transactions that—(A)occur automatically;(B)are made pursuant to an advance election; or(C)except as provided in paragraph (2), involve a purchase or sale of equity securities that satisfies the conditions under section 240.10b5–1(c) of title 17, Code of Federal Regulations;(2)may not exempt from those rules a transaction made by an executive officer or director of an issuer under a plan that—(A)is described in section 240.10b5–1(c)(1)(i)(A)(3) of title 17, Code of Federal Regulations; and(B)was adopted—(i)with respect to an event described in any of sections 1 through 6 of Form 8–K, between—(I)the occurrence of that event; and(II)the filing or furnishing of a current report on Form 8–K with respect to that event; and(ii)with respect to an event described in section 7 or 8 of Form 8–K, between—(I)the date on which the issuer determines that the issuer will disclose that event; and(II)the filing or furnishing of a current report on Form 8–K with respect to that event; and(3)shall exempt from those rules—(A)issuers required to adopt and administer a code of ethics pursuant section 270.17j–1 of title 17, Code of Federal Regulations; (B)any other issuer registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.), the investment advisers of which are required to adopt and administer a code of ethics pursuant to section 275.204A–1 of title 17, Code of Federal Regulations; and(C)any event that is— (i)described in any of sections 1 through 6 of Form 8–K; and (ii)announced by the issuer in a press release or other method of dissemination described in section 243.101(e)(2) of title 17, Code of Federal Regulations.(c)

Foreign issuers

In issuing rules under subsection (a), the Commission may include foreign issuers required to use the form described in section 249.306 of title 17, Code of Federal Regulations.(d)

Rule of construction

Each reference in this section to a provision of the Code of Federal Regulations (including each reference in this section to Form 8–K) shall be construed as a reference to that provision as in effect on the date of enactment of this section.