Kennedy introduces bill to deter executives of foreign companies from insider trading at the expense of American investors

“I’m introducing the Holding Foreign Insiders Accountable Act to level the field between  American and foreign firms, discourage insider trading and help Americans make more  informed choices about where to invest their hard-earned money.”

WASHINGTON – Sen. John Kennedy (R-La.) today introduced the Holding Foreign Insiders  Accountable Act to hold the executives of foreign companies that are traded on U.S. stock  exchanges to the same disclosure requirements that executives of U.S.-based firms follow. 

Currently, executives of U.S. publicly-traded companies must disclose any trades they make  of their own company’s stocks to the Securities and Exchange Commission (SEC) within two  business days of the trade. Executives of foreign firms, however, are not required to make  such timely disclosures. Foreign executives are exempt from this requirement, and must only  paper-file these disclosures to the SEC long after they have made their trades. The lag this  system creates means that foreign executives can keep trades private for a longer period of  time, which promotes insider trading at the expense of everyday American investors.  

“Without being required to make quick disclosures, Chinese and Russian executives— along with many other foreign company insiders—have been able to make trades to  avoid personal losses that can leave other investors in the lurch. I’m introducing the  Holding Foreign Insiders Accountable Act to level the field between American and  foreign firms, discourage insider trading and help Americans make more informed  choices about where to invest their hard-earned money,” said Kennedy. 

The bill would specifically amend Section 16 (a) of the Securities Exchange Act to require  executives of public companies based outside the U.S. to make electronic disclosures of  trades in their company’s stocks to the SEC within two business days. The SEC would then  make that information available to the public. This is the standard that currently applies to firms  based in the U.S.

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