Dec 16, 2021 - Economy

SEC goes on rule-making spree

A set of $100 rolled up with red tape around it

Illustration: Aïda Amer/Axios

Federal securities regulators went on a rule-making spree Wednesday, including new proposals related to executive stock trading and corporate share buybacks.

Why it matters: This felt like a giant throat-clearing, as the SEC prepares to address issues like crypto and SPACs in 2022.

  • Next year also could see new disclosure requirements related to climate risk, cybersecurity risk and human capital management.

Insider trading: The SEC wants to tighten Rule 10b5-1, which permits pre-approved stock sale plans by top executives. Such trades hit new highs in 2021.

  • Rule 10b5-1 was designed to prevent insiders from trading on material information, but doesn't. The SEC's proposal would require a trading plan to be in place for at least 120 days before actual sales can occur, and also for greater disclosure.
  • It's also worth noting that, on the same day the SEC looked to crack down on corporate executive sales, House Speaker Nancy Pelosi publicly said that Congress will keep looking the other way when it comes to its own members.

Stock buybacks: The SEC wants companies to disclose share repurchases within one business day, and also to explain "the objective or rationale for the share repurchases and the process or criteria used to determine the repurchase amount."

  • Visa yesterday announced that its board has approved a $12 billion share buyback program. Overall, corporate stock buybacks are on pace for a record year.

The SEC also proposed new money market rules, in which it would increase liquidity requirements and buffers, and new disclosure requirements on security-based swaps.

The bottom line: Gary Gensler is just getting started.

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