This week, the SEC’s Director of Corporate Finance spoke to a professional meeting dealing with corporate governance and, at the end of some rambling remarks of self-praise for the Commission, fired a couple of warning shots across the bow of public boards.

The first related to Rule 10b5-1 plans; here, an officer or director sets up a trading program to deal in shares of his own company on an allegedly fixed schedule so that there can be no suspicion that trades were made while material information was not public. By operation of these plans, therefore, trading could occur while there was in fact non-public information, in that the trader was not acting in unfair reliance upon it; however, sometimes the selling executive stepped in to stop a trade that perhaps would not have been economically advantageous.

The hints or warnings (take your pick): the company itself should have the power to abort transactions when the company knows that in fact there is material non-public information, particularly in the gap time before an announcement can be made by filing SEC Form 8-K; good plans should build in waiting periods before allowing trades, or later allowing derailing trades.

The second related to board action to grant ISOs (tax-favored options) during periods where there is material non-public information. To obtain best tax treatment it is necessary to grant options at or above fair market value, and boards often peg exercise price to the stock price at the time of grant. But what if there is material nonpublic positive news– the real fair market value of the stock is higher than what the Street is trading at. The grant should be priced after an announcement, or at a higher price in anticipation of a price bump upon a future announcement.

While these suggestions clearly have strong policy bases, I simply note that once again the SEC is trying to make third parties the enforcer of SEC views, including some (such as here) not at all clear under extant formal SEC rules. Lawyers and CPAs are used to being SEC gatekeepers; directors also, I guess. And since boards are the guardians of corporate “hygiene,” perhaps rightly so.