8–K Trading Gap Act of 2019

IIB 116TH CONGRESS 2D SESSION H. R. 4335 IN THE SENATE OF THE UNITED STATES JANUARY 14, 2020 Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs AN ACT To amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to issue rules that prohibit officers and directors of certain companies from trading securities in anticipation of a current re- port, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 23:07 Jan 14, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4335.RFS H4335 pamtmann on DSKBC07HB2PROD with BILLS 2 HR 4335 RFS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘8–K Trading Gap Act 2 of 2019’’. 3 SEC. 2. PROHIBITION ON CERTAIN TRADING IN ANTICIPA- 4 TION OF A CURRENT REPORT. 5 The Securities Exchange Act of 1934 (15 U.S.C. 78a 6 et seq.) is amended by inserting after section 10D the fol- 7 lowing: 8 ‘‘SEC. 10E. PROHIBITION ON CERTAIN TRADING IN ANTICI- 9 PATION OF A CURRENT REPORT. 10 ‘‘(a) PROHIBITION.—Not later than 1 year after the 11 date of enactment of this section, the Commission shall 12 issue rules that require each issuer that is subject to re- 13 porting requirements under section 13(a) or 15(d) to es- 14 tablish and maintain policies, controls, and procedures 15 that are reasonably designed to prohibit executive officers 16 and directors of the issuer from purchasing, selling, or 17 otherwise transferring any equity security of the issuer, 18 directly or indirectly— 19 ‘‘(1) with respect to an event described in sec- 20 tions 1 through 6 of Form 8–K, between— 21 ‘‘(A) the occurrence of such event; and 22 ‘‘(B) the filing or furnishing of a current 23 report on Form 8–K with respect to such event; 24 and 25 VerDate Sep 11 2014 23:07 Jan 14, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4335.RFS H4335 pamtmann on DSKBC07HB2PROD with BILLS 3 HR 4335 RFS ‘‘(2) with respect to an event described in sec- 1 tion 7 or 8 of Form 8–K, between— 2 ‘‘(A) the date on which the issuer deter- 3 mines that it will disclose such event; and 4 ‘‘(B) the filing or furnishing of a current 5 report on Form 8–K with respect to such event. 6 ‘‘(b) PERMISSIBLE TRANSACTIONS.—In issuing rules 7 under subsection (a), the Commission— 8 ‘‘(1) may exempt certain transactions that the 9 Commission determines is appropriate, including 10 those that— 11 ‘‘(A) occur automatically; 12 ‘‘(B) are made pursuant to an advance 13 election; or 14 ‘‘(C) except as provided in paragraph (2), 15 involve a purchase or sale of equity securities 16 that satisfies the conditions under section 17 240.10b5–1(c) of title 17, Code of Federal Reg- 18 ulations; 19 ‘‘(2) may not exempt from those rules a trans- 20 action made by an executive officer or director of an 21 issuer under a plan that— 22 ‘‘(A) is described in section 240.10b5– 23 1(c)(1)(i)(A)(3) of title 17, Code of Federal 24 Regulations; and 25 VerDate Sep 11 2014 23:07 Jan 14, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4335.RFS H4335 pamtmann on DSKBC07HB2PROD with BILLS 4 HR 4335 RFS ‘‘(B) was adopted— 1 ‘‘(i) with respect to an event described 2 in sections 1 through 6 of Form 8–K, be- 3 tween— 4 ‘‘(I) the occurrence of such event; 5 and 6 ‘‘(II) the filing or furnishing of a 7 current report on Form 8–K with re- 8 spect to such event; and 9 ‘‘(ii) with respect to an event de- 10 scribed in section 7 or 8 of Form 8–K, be- 11 tween— 12 ‘‘(I) the date on which the issuer 13 determines that it will disclose such 14 event; and 15 ‘‘(II) the filing or furnishing of a 16 current report on Form 8–K with re- 17 spect to such event; and 18 ‘‘(3) shall exempt from those rules— 19 ‘‘(A) issuers required to adopt and admin- 20 ister a code of ethics pursuant section 270.17j– 21 1 of title 17, Code of Federal Regulations, and 22 any other issuers registered under the Invest- 23 ment Company Act of 1940 whose investment 24 advisers are required to adopt and administer a 25 VerDate Sep 11 2014 23:07 Jan 14, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4335.RFS H4335 pamtmann on DSKBC07HB2PROD with BILLS 5 HR 4335 RFS code of ethics pursuant to section 275.204A–1 1 of title 17, Code of Federal Regulations; and 2 ‘‘(B) any event where such event is de- 3 scribed in sections 1 through 6 of Form 8–K 4 and the issuer has announced such event in a 5 press release or other method of dissemination 6 that complies with the requirements of section 7 101(e)(2) of Regulation FD (17 CFR Part 8 243.101(e)(2)).’’. 9 Passed the House of Representatives January 13, 2020. Attest: CHERYL L. JOHNSON, Clerk. VerDate Sep 11 2014 23:07 Jan 14, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4335.RFS H4335 pamtmann on DSKBC07HB2PROD with BILLS