Promoting Transparent Standards for Corporate Insiders Act

Floor Speech

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Mr. Speaker, H.R. 1528, the Promoting Transparent Standards for Corporate Insiders Act, is a bill introduced by Chairwoman Maxine Waters for several Congresses to strengthen confidence in our capital markets by ensuring everyone plays by the same rules.

This bill passed with overwhelming bipartisan support in the last Congress and is designed to promote strong enforcement against financial fraud by ensuring corporate executives cannot indirectly or illegally trade on material nonpublic information they know about their companies.

The Securities and Exchange Commission, the SEC, prohibits insider trading as a fraud that hurts investors as well as the integrity of our capital markets. Those accused of illegal insider trading sometimes defend themselves using the SEC's rule for trading plans and claim any trades that occurred while they possessed inside information were made pursuant to a preapproved trading plan. But the rule for trading plans has several shortcomings and loopholes that may allow corporate insiders to get away with insider trading.

This bill would require the SEC to study whether to amend its rule for trading plans to limit the ability of corporate insiders to, for example, adopt multiple overlapping plans or change their plans to indirectly take advantage of inside information. This bill would then require the SEC to report to Congress and revise its rules based on the results of the study.

This bill is needed to protect confidence in our markets. For example, last year, we saw numerous pharmaceutical executives profiting from conveniently timed announcements regarding the companies' progress toward a COVID-19 vaccine.

For instance, shortly after Moderna announced positive results for its vaccine, the pharmaceutical company's CEO altered his trading plan to increase the number of shares sold through the plan. Shortly thereafter, he sold shares for millions of dollars in profit.

Similarly, on the same day Pfizer announced positive data regarding its vaccine, Pfizer's CEO sold more than $5 million worth of shares as part of his trading plan.

This bill is supported by investor and consumer advocates, public pension funds, and State securities regulators, including the California Public Employees' Retirement System, the Council of Institutional Investors, and the North American Securities Administrators Association.

In closing, I urge my colleagues to vote ``yes'' on H.R. 1528, which will help prevent corporate insiders from using inside information to rig the game in their favor at the expense of investors and the integrity of our markets.

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