Kennedy and Van Hollen push for bipartisan bill to discourage executives of foreign companies from …

void billions in losses on the U.S. stock exchange by following a different set of rules than Americans. This insider trading negatively impacts American investors. The Holding Foreign Insiders Accountable Act aims to combat this issue by mandating foreign executives to disclose their trades promptly,” Kennedy explained. Van Hollen added, “When corporate insiders sell their stocks, transparency is crucial for investors and the public. U.S. companies adhere to disclosure regulations, but foreign companies do not. Our bill aims to level the playing field and prevent foreign executives from taking advantage of American investors through insider trading.”

Presently, executives of American publicly traded companies must report any stock trades they make to the SEC within two business days. In contrast, executives of foreign companies are not subject to the same disclosure requirements and have to submit their filings on paper, creating a delay in the information being made public. This delay enables foreign executives to keep their trades private for a longer duration, fostering an environment ripe for insider trading that harms American investors.

The proposed legislation seeks to amend Section 16 (a) of the Securities Exchange Act to mandate executives of foreign public companies to electronically disclose their stock trades to the SEC within two business days. This information would then be accessible to the public, mirroring the current practices for U.S.-based firms.

The idea behind the Holding Foreign Insiders Accountable Act dates back to May 2022 when Kennedy first introduced the bill. In August 2022, reports revealed that Chinese investors were able to evade substantial losses by selling stocks prior to market declines, hinting at informed decision-making that disadvantaged American investors. In April 2023, Kennedy and Van Hollen detailed their bill in the Wall Street Journal, highlighting the urgency and importance of regulating foreign executives’ trades on U.S. stock exchanges.

The Holding Foreign Insiders Accountable Act aspires to bring parity in the treatment of all corporate insiders, irrespective of their geographical location. By requiring foreign executives to promptly disclose their trades, the legislation aims to deter insider trading practices that put American investors at a disadvantage. This bipartisan effort led by Senators Kennedy and Van Hollen underscores the importance of protecting American investors and ensuring transparency and fairness in the financial markets.

In conclusion, the Holding Foreign Insiders Accountable Act serves as a crucial step in deterring opportunistic insider trading by foreign executives operating in U.S. stock markets. The proposed mandate for timely disclosure of trades aims to uphold fairness, transparency, and integrity in the financial sector while safeguarding the interests of American investors.