WASHINGTON – Sen. John Kennedy (R-La.) today introduced the Holding Foreign Insiders Accountable Act to hold the executives of foreign companies that are traded on U.S. stock exchanges to the same disclosure requirements that executives of U.S.-based firms follow.
Currently, executives of U.S. publicly-traded companies must disclose any trades they make of their own company’s stocks to the Securities and Exchange Commission (SEC) within two business days of the trade. Executives of foreign firms, however, are not required to make such timely disclosures. Foreign executives are exempt from this requirement, and must only paper-file these disclosures to the SEC long after they have made their trades. The lag this system creates means that foreign executives can keep trades private for a longer period of time, which promotes insider trading at the expense of everyday American investors.
“Without being required to make quick disclosures, Chinese and Russian executives—along with many other foreign company insiders—have been able to make trades to avoid personal losses that can leave other investors in the lurch. I’m introducing the Holding Foreign Insiders Accountable Act to level the field between American and foreign firms, discourage insider trading and help Americans make more informed choices about where to invest their hard-earned money,” said Kennedy.
The bill would specifically amend Section 16 (a) of the Securities Exchange Act to require executives of public companies based outside the U.S. to make electronic disclosures of trades in their company’s stocks to the SEC within two business days. The SEC would then make that information available to public. This is the standard that currently applies to firms based in the U.S.
Text of the Holding Foreign Insiders Accountable Act is available here.
Currently, executives of U.S. publicly-traded companies must disclose any trades they make of their own company’s stocks to the Securities and Exchange Commission (SEC) within two business days of the trade. Executives of foreign firms, however, are not required to make such timely disclosures. Foreign executives are exempt from this requirement, and must only paper-file these disclosures to the SEC long after they have made their trades. The lag this system creates means that foreign executives can keep trades private for a longer period of time, which promotes insider trading at the expense of everyday American investors.
“Without being required to make quick disclosures, Chinese and Russian executives—along with many other foreign company insiders—have been able to make trades to avoid personal losses that can leave other investors in the lurch. I’m introducing the Holding Foreign Insiders Accountable Act to level the field between American and foreign firms, discourage insider trading and help Americans make more informed choices about where to invest their hard-earned money,” said Kennedy.
The bill would specifically amend Section 16 (a) of the Securities Exchange Act to require executives of public companies based outside the U.S. to make electronic disclosures of trades in their company’s stocks to the SEC within two business days. The SEC would then make that information available to public. This is the standard that currently applies to firms based in the U.S.
Text of the Holding Foreign Insiders Accountable Act is available here.
