The House passed late Monday the 8-K Trading Gap Act, which would fix a loophole allowing corporate executives to trade on information before it's disclosed to the public and to their own shareholders.
As it stands now if a public company has a "significant corporate event" the company must disclose it to the public by filing a Form 8-K within four days of the event.
"During this four-day gap, executives at the company know about the significant event, but other investors, and the public, do not," said Rep. Carolyn B. Maloney, D-New York, the bill's sponsor, in a statement.
Maloney said the bill, H.R. 4335, offers a "very simple solution to this problem: prohibit executives from trading during the four-day gap between when an event happens and when the company publicly files a Form 8-K to alert the public and shareholders of the event."
Maloney said her bill received unanimous, bipartisan support in the House Financial Services Committee, she noted, and as well as a broad bipartisan vote out of the House. "I hope the bill will pass the Senate quickly. It's just commonsense."
