SEC to Modernize Share Repurchase Disclosures, Strengthen Insider Trading Protections

The Securities and Exchange Commission has proposed changes to modernize and improve disclosure about repurchases of an issuer’s equity securities that are registered under the Securities Exchange Act of 1934. Under the proposed rule, issuers would be required to provide a new Form SR by the end of the first business day following the day the issuer executes a share repurchase.

The proposal would also make changes to existing periodic disclosure requirements regarding repurchases of an issuer’s equity securities. Comments on the proposal will be due 45 days after publication in the Federal Register.

Separately, the SEC also proposed amendments to strengthen its requirements under the Securities Exchange Act of 1934 aimed at preventing insider trading. The proposal includes updates to Rule 10b5-1(c), which provides an affirmative defense to insider trading for parties that frequently have access to material nonpublic information, including corporate officers, directors and issuers.

Among other things, the proposed changes would update the requirements for the affirmative defense, including imposing a cooling off period before trading could commence under a plan, prohibiting overlapping trading plans and limiting single-trade plans to one trading plan per twelve month period. In addition, the proposed rules would require directors and officers to furnish written certifications that they are not aware of any material nonpublic information when they enter into the plans and expand the existing good faith requirement for trading under Rule 10b5-1 plans. Comments will be due 45 days after publication in the Federal Register.

Share.