AFR encouraged by SEC’s proposals addressing regulatory loopholes

Americans for Financial Reform is encouraged by the Securities and Exchange Commission (SEC) proposals to address several long-standing loopholes exploited by financial market participants and provide greater transparency to investors and address issues of safety and soundness across the financial system. We look forward to providing detailed comments on them.

The proposals include:

• Closing loopholes in reporting of securities-based swaps positions. Expanding the reporting requirements for securities-based swaps to ensure that investors know who all the major investors in a company are, regardless of the form in which that investment is made
• Better scrutinizing executive insider trading via 10b5-1 plans. For too long corporate executives, privy to insider information, have been able to legally trade on that information using 10b5-1 plans. The Commission’s proposal requires greater disclosures around transactions, alterations of certain questionable practices, and the inclusion of a “cooling-off period”
• Greater transparency around share buybacks. For most of the 20th century, many stock buybacks were considered illegal because they were considered a form of stock manipulation. While the Commission is not proposing share buybacks be subject to that same standard once again, greater periodic disclosures to executives’ justification behind buybacks is a step in the right direction.