5.22.2009 The SEC announced that it has taken steps to strengthen existing rules governing trading of securities by its personnel. Current agency rules prohibit, among other things, short selling, carrying securities on margin, engaging in options or futures transactions in instruments whose value is derived from an underlying security, and holding a security interest in broker-dealers and registered investment advisers. The current rules also mandate that employees hold stock they purchase for at least six months, to limit speculative activity. Further, SEC employees are required to report all trades within five days of receiving confirmations.
In addition to the existing rules, the newly approved rules will:
- Require employees to pre-clear all their securities transactions to ensure, among other things, that the company whose stock they are trading is neither being investigated by the SEC nor is involved in an IPO. Also, any employee with access to non-public information about a company’s registration statement may not trade in that security.
- Prohibit ownership of securities in publicly traded exchanges and transfer agents, in addition to existing prohibitions against owning securities in broker-dealers, registered investment advisers and others directly regulated by the Commission.
- Require that all employees authorize their brokers to provide the agency with duplicate trade confirmation statements. Those statements would then be integrated into a new computerized system so that employees can more easily comply with reporting obligations and the ethics office can more effectively monitor compliance.
- Require employees to certify before any trade that they do not possess any non-public information about the company being traded.
Click http://www.sec.gov/news/press/2009/2009-121.htm to access the SEC’s release announcing the proposed rules.