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B-334890 Jan 10, 2023 1 (2023-01-10)

handle is hein.gao/gaooda0001 and id is 1 raw text is: GU.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 B-334890 January 10, 2023 Committee on Banking, Housing, and Urban Affairs United States Senate Committee on Financial Services House of Representatives Subject: Securities and Exchange Commission: Insider Trading Arrangements and Related Disclosures Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Securities and Exchange Commission (SEC) entitled Insider Trading Arrangements and Related Disclosures (RIN: 3235-AM86). We received the rule on December 14, 2022. It was published in the Federal Register as a final rule on December 29, 2022. 87 Fed. Reg. 80362. The effective date is February 27, 2023. SEC states that the final rule amends an existing rule under the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq., which provides affirmative defenses to trading on the basis of material nonpublic information in insider trading cases. According to SEC, the amendments provided by the final rule add new conditions designed to address concerns about abuse of the rule to trade securities opportunistically on the basis of material nonpublic information in ways that harm investors and undermine the integrity of the securities markets. SEC also states that the final rule adopts new disclosure requirements regarding the insider trading policies and procedures of issuers, the adoption and termination (including modification) of plans that are intended to meet the rule's conditions for establishing an affirmative defense, and certain other similar trading arrangements by directors and officers. In addition, SEC states that the final rule adopts amendments to the disclosure requirements for director and executive compensation regarding equity compensation awards made close in time to the issuer's disclosure of material nonpublic information. Finally, SEC states that it is adopting amendments to Forms 4 and 5 to require filers to identify transactions made pursuant to a plan intended to meet the rule's conditions for establishing an affirmative defense, and to require disclosure of bona fide gifts of securities on Form 4. Enclosed is our assessment of SEC's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Shari Brewster, Assistant General Counsel, at (202) 512-6398. Shirley A. Jones Managing Associate General Counsel

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