The SEC will revisit rules for executive stock sales, Chairman Gary Gensler said Monday at the virtual CFO Network Summit.
Mr. Gensler has asked Securities and Exchange Commission staff for recommendations for updating the rules allowing corporate insiders to buy and sell stock, he said.
The 20-year-old rules allow for stock trading by corporate executives and directors through trading plans that limit them to open trading windows and are adopted in good faith. Those plans "have led to real cracks in our insider trading regime," Mr. Gensler said.
One of his concerns is the lack of a cooling-off period before a trade, which could provide a loophole to participate in insider trading. A proposed mandate for at least four months of cooling off has had bipartisan support, he said.
Having no limitations on when the trading plans can be canceled lets insiders do so when they have material nonpublic information and "seems upside-down to me," because it could be "as economically significant as carrying out an actual transaction," he said.
There should also be mandatory disclosure requirements for stock trading plans — and limits on the number of such plans, Mr. Gensler said. Also, SEC staff will consider other reforms, including how such trading intersects with share buybacks.
As SEC staff revisit the so-called 10b-5-1 plan rules, they "will use all of the tools in our toolbox to ensure we are identifying and punishing abuses of 10b5-1 plans," and insiders not acting in good faith cannot use those plans to defend against insider trading charges, he said.
"Anytime we can increase investor confidence in the markets, that's a good thing," Mr. Gensler said. "It helps both investors and businesses seeking to raise capital, grow and innovate."