Sign up today and take advantage of member-only content — the kind of timely, cutting edge industry insight that only Money Management Executive can deliver.
  • Exclusive Online Only Content
  • Free Daily Email News Alerts
  • Asset Management Blogs

ICI Supports Proposal for Greater Insider Trading Disclosure


In a recent letter to the Securities and Exchange Commission, the Investment Company Institute supported the SEC's proposal to amend Form 8-K under the Securities Exchange Act of 1934, but suggested that several changes be made. Form 8-K is used to report the occurrence of any material events or corporate changes that are of importance to investors.

The proposed amendment would require disclosing certain insider trading activities on Form 8-K, including directors' and executive officers' transactions in company equity securities and loans to them that are guaranteed by their company.

"The institute strongly supports the commission's proposal," the ICI's letter said. "Our members invest almost $4 trillion in U.S. equity securities on behalf of millions of individual shareholders. As significant participants in the securities markets, our members are keenly interested in having timely access to information about transactions in an issuer's securities by corporate insiders."

However, there are some parts of the proposal that the ICI believes should be changed. The proposal says that the transactions that would be required in Form 8-K that are also required by Section 16(a) of the Exchange Act would have to be disclosed in both places. The ICI believes that duplication is unnecessary and could lead to some confusion for investors.

The SEC sought comment specifically on whether the requirements should extend beyond directors and executive officers to principal financial officers and principal accounting officers. The ICI believes it should. The institute also said that the requirements should include directors' and officers' holdings in the company in addition to transactional information.

Finally, while the ICI supports the tabular format of disclosure proposed by the SEC, it suggests a "plain English" description of the transactions as well to make it easier for investors to understand.