The activist SEC agenda has generated for comment two new rules designed to provide greater information to the marketplace; not surprisingly, providing information= more rules about what must be disclosed and even more forms to be filed.  As if public disclosure is not already overwhelming….

Insider trading by executives with early access to material facts was to be controlled by permitting trading safe harbor rules under Rule 10b5-1.  These plans were designed to make trades respond to mechanical triggers such as price or timing, divorced from exercise of investor discretion which could be unfairly informed by knowing what the market did not yet know.  In operation it became clear that the safe harbor was subject to clever gaming, including some now the subject of a proposed new rule (and some not…).

Specifically the rule, open for public comment would impact plans by: requiring a time delay between plan adoption and market trading; banning multiple trading overlapping plans; limiting single-trade plans to once each 12 months; requiring trading officers and directors to certify they in fact did not have any material nonpublic information at time of adoption  (in some instances, not such a great regulatory idea depending on the content of the plan itself).

Companies would be required to disclose: policies relating to insider trading as relates to option grants; any options granted within 14 days of release of non-pubic material information; changes in market price of securities for each of the day before and the day after release of information.

Stock buy-backs also are subject to a proposed new rule open for public comment.  Generally speaking, companies would be required to make prompt disclosures of repurchases, include buy-back reporting in periodic reports, and state reasons for the repurchase  (which presumably would NOT list  as a purpose “facilitating executive sale of company shares”).

For persons interested in learning more or commenting on the proposals, the SEC website can link you to the granular releases describing the rules (for example, the release for Rule 10b5-1[(33-11013] weights in at 163 pages) and the comment pages to record your view–no special qualifications or status are required to post your commentaries.