Van Hollen Introduces Bill To Prevent Unfair Corporate Insider Advantage In Stock Sales

Statement

Today, U.S. Senator Chris Van Hollen (D-Md.) introduced the 8-K Trading Gap Act of 2019 to prevent executives and other corporate insiders from profiting off the gap between the occurrence of a significant event, such as bankruptcy or an acquisition, and its legally mandated disclosure to the Securities and Exchange Commission (SEC). Right now, companies have four days to file the 8-K disclosure form with the SEC, but they are not barred from trading in advance of the filing -- giving them an unfair advantage. This bill would close this gap by requiring the SEC to write a rule to prohibit insiders from making trades during this four-day period.

"As we saw in the Equifax consumer data breach, big corporate executives and insiders have a clear advantage over the public when it comes to the 8-K filing. Why would we give them four full days to sell their stock before disclosing a major problem? As SEC Commissioner Robert Jackson has said, it's an open invitation to insider trading," said Senator Van Hollen. "This legislation is a no-brainer, and it will help ensure fairness and protect shareholders. I'll be urging the Senate Banking Committee to consider the bill without delay."

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