The U.S. Securities and Exchange Commission (SEC) plans to tighten requirements for insider trading and share repurchases by companies. Currently, corporate insiders can sell or buy shares of their company’s stock under pre-announced portfolio management plans. By disclosing these plans in advance, top managers protect themselves from possible insider trading charges in the future.

However, SEC head Gary Gensler believes the current requirements are insufficient.

“The basic problem is that insiders usually have important information that other people don’t have. How then can they sell and buy stocks in a way that is fair to the market?” – he says.

 Among the changes proposed by the SEC is the introduction of a 120-day gap between a top executive’s announcement of plans to buy or sell a company’s stock and the transaction itself. The regulator also intends to ban partially overlapping portfolio management plans. Currently, having several plans at the same time, top managers can choose between them, adjusting to a certain situation, Gensler noted. According to CNBC, the heads of U.S. corporations as well as other top executives sold a total of $69 billion worth of shares in their companies in 2021. Among them are the heads of Tesla Inc., Microsoft Corp. and Amazon.com Inc. Ilon Musk, Satya Nadella and Jeff Bezos.

In addition, the SEC plans to require companies to provide more details about share repurchases, the volume of which also reached a record high this year. According to the regulator, companies’ disclosure of share repurchases should be more detailed and more frequent. Instead of publishing share repurchases quarterly, companies should disclose the transactions as soon as the next day, the SEC said.

In addition, the regulator said, companies should disclose within 10 days whether any top executives bought their shares. Share repurchases by companies reduce the number of securities outstanding, which increases earnings per share. Like dividend payments, share repurchases are a means of rewarding investors. However, critics of this practice believe that share repurchases allow top managers who receive stock compensation to increase their compensation at the expense of employee salaries or investments.