Promoting Transparent Standards for Corporate Insiders Act

Mr. Speaker, I yield myself such time as I may consume.

I am very pleased to have worked with Ranking Member McHenry on this bipartisan bill, H.R. 624, the Promoting Transparent Standards for Corporate Insiders Act.

The bill is designed to promote strong enforcement against financial fraud by ensuring that corporate executives cannot indirectly and illegally trade on material nonpublic information that they know about their companies.

The Securities and Exchange Commission prohibits insider trading as a fraud that hurts both company investors and the integrity of our capital markets. Those accused of illegal insider trading may defend themselves by using the SEC's rule for trading plans, Rule 10b5-1, and state that any trades that occurred while they possessed inside information were made pursuant to a pre-approved training plan. But the rule for trading plans has several shortcomings that may allow corporate insiders to get away with insider trading.

My bill would require the SEC to study whether to amend its rule for trading plans to limit the ability of corporate insiders to, for example, adopt multiple, overlapping plans or change their plans to indirectly take advantage of inside information. The bill would then require the SEC to report to Congress and revise its rules based on the results of the study.

This bill is much needed as fraudulent stock sales by high-ranking executives can erode confidence in our markets. For example, in November of 2017, the CEO of Intel reportedly sold $39 million in stock after he learned of two security flaws in Intel processors and within days of revising his trading plan for the second time that year.

This bill is supported by investor and consumer advocates, public pension funds, and State securities regulators, including Public Citizen; Americans for Financial Reform; California Public Employees' Retirement System, CalPERS; the California State Teachers' Retirement System, CalSTRS; the Council of Institutional Investors; Healthy Markets; and North American Securities Administrators Association.

I thank Ranking Member McHenry for joining me in reintroducing this bill this Congress, and I urge Members to vote ``yes.''

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentlewoman from New York (Ms. Velazquez), who is a senior member of the Financial Services Committee and the chairwoman of the Small Business Committee.

Mr. Speaker, I yield 2 minutes to the gentleman from Connecticut (Mr. Himes), who is a senior member on the Financial Services Committee and on the Intelligence Committee.

Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Casten).

Mr. Speaker, I yield myself the balance of my time. I am pleased that I was able to work in a bipartisan manner with the gentleman from North Carolina (Mr. McHenry), the committee's ranking member.

This bill shows that protecting our capital markets is something that both sides of the aisle should support. The SEC is indeed our cop on the block, and they need this bill and additional funding resources in order to make sure that our markets and our investors are safe from fraud.

Another thing that the SEC needs is stability. During the recent government shutdown, the longest shutdown in American history, the SEC essentially closed its doors, furloughing 94 percent of its staff and suspending its enforcement efforts.

For 34 days the agency was forced to police the markets with a skeleton crew of 110 enforcement staff. This may translate into unacceptable delays in holding bad actors accountable and obtaining relief for their victims.

The SEC wasn't the only agency impacted. The Congressional Budget Office estimates that the Trump shutdown cost our economy $11 billion, and $3 billion of that will never be recovered.

What is more, the White House wouldn't even rule out the chance of another shutdown in 3 weeks.

Mr. Speaker, we should fully fund our government and focus our efforts on bipartisan compromises like H.R. 624.

Again, I am pleased that one of the first bills to be brought to the floor for a vote from the Financial Services Committee is a bill that is cosponsored by Ranking Member McHenry that seeks to strengthen the ability of the SEC to punish fraudsters and protect investors.

So, Mr. Speaker and Members, again, I am pleased to have had the opportunity to work with the ranking member and to come together and present a bill that is extremely important and will go a long way to getting rid of insiders who would basically cheat the system.

So Mr. McHenry and I have not only worked on this bill together, we developed a relationship some time ago. And I know that there are those who are thinking that, oh, I don't know if both sides are going to be able to get together in an atmosphere that really is not conducive to getting along sometimes, but Mr. McHenry and I have shown that it is possible, and we are looking forward to other opportunities.

We are not going to agree on everything and we are going to oppose each other on some things, but this bill here today indicates that we are willing to work together to try and see what we can do as cosponsors and coauthors of important pieces of legislation that both sides of the aisle should be supporting.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 624, the Promoting Transparent Standards for Corporate Insiders Act.

This bipartisan legislation is critical for protecting mom-and-pop investors from the effects of insider trading while ensuring that the rules are clear, fair, and not unduly burdensome.

I want to first thank Chairwoman Waters for her sponsorship of this bill and for writing this legislation. I am glad to join her in a meaningful effort to help the Securities and Exchange Commission better understanding illicit trading, and I look forward to working with her in many more bipartisan efforts and her leadership on the Financial Services Committee.

Mr. Speaker, preventing and cracking down on fraud and abuse within our financial system, such as illegal insider trading, is apolitical and should be.

When a corporate insider breaks the rules on trading and profits from trading on insider information, that illegal activity hurts everyday investors who diligently put their hard-earned money away for retirement.

To be clear, most corporate insiders faithfully follow the insider trading guidelines under Rule 10b5-1. I know that is not an everyday quoted thing, but those folks who are abiding by the law are complying with this very complex but important rule from the Securities and Exchange Commission. That allows for them to purchase and sell securities without concern for insider trading liability.

These law-abiding corporate insiders should not be punished or barred from trading just because of the bad actors who succumbed to greed and those who chose to illegally trade on insider information.

When properly adhered to, 10b5-1 insider trading rules are fair tools for allowing folks to help pay for down payments on a home or help pay for their kids' college education or other normal financial transactions.

Moreover, allowing folks to purchase and sell securities at predetermined times on a scheduled basis under that rule ensures market stability and decreases the risk of volatility by preventing fraudulent behavior, such as pump-and-dump schemes that sometimes occur in the financial markets.

By directing the Securities and Exchange Commission to study whether Rule 10b5-1 should be amended and to consider how any amendments to the rule would clarify and enhance existing prohibitions against insider trading, this legislation achieves a bipartisan goal of protecting mom- and-pop investors while encouraging economic growth.

And, again, I want to thank Chairwoman Waters for her leadership. I applaud her willingness to work in a bipartisan way and in this important bipartisan manner that she is approaching the Financial Services Committee's jurisdiction we both care so much about. That bipartisan activity should help improve Federal oversight and protect American investors as well as enhance economic growth.

Mr. Speaker, I urge my colleagues to support H.R. 624, and I reserve the balance of my time

Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Gooden), a new Member of this body and a new member of the Financial Services Committee.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I am prepared to close, and I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, now, being in the minority and the majority, we are both learning something in the organization of control and debate on the House floor. Chairwoman Waters has been the ranking member of the committee previously to coming to the chair. Now I have to ask her for time, which is a different process.

Mr. Speaker, I would like to close on this important bill, the first bill from the Financial Services Committee for this Congress. It is a bill written by Chairwoman Waters and cosponsored by me as the ranking member.

This is a piece of legislation that we had discussed and worked through last Congress, and she was the lead sponsor and I was the cosponsor of it last Congress, and I held to my word and she has held to her word.

This is proof that we can have bipartisan achievement that is of substance, that is real, that is meaningful, and we can do it representing vastly different districts, having different world views, having our disagreements that we have stated publicly and privately to one another, but still being willing to work through those disagreements to hammer out something that is good for the investor, for the consumer, to make sure that we have important consumer protections while also having vibrant markets of exchange so that we can lift folks out of poverty, to actually make sure people are safe for retirement.

There are wonderful opportunities for us to legislate in a bipartisan way. This is proof of what potential we have in the Financial Services jurisdiction.

Mr. Speaker, I want to thank Chairwoman Waters for her efforts here. I urge my colleagues to support and vote for this important piece of legislation.

Mr. Speaker, I thank once again Chairwoman Waters for her leadership, and I yield back the balance of my time.

Madam Speaker, due to a scheduled medical procedure, I was physically absent from the House of Representatives from January 10, 2019 to February 5, 2019. During that time, I missed 44 recorded votes. Had I been present for those votes, I would have voted: on Roll Call No. 22 on the Republican Motion to Recommit on H.R. 267, I would have voted ``Yea;'' on Roll Call No. 23 on the Passage of H.R. 267, I would have voted ``Nay;'' on Roll Call No. 24 on the Republican Motion to Recommit on H.R. 265, I would have voted ``Yea;'' on Roll Call No. 25 on the Passage of H.R. 265, I would have voted ``Nay;'' on Roll Call No. 26 on the Republican Motion to Recommit on H.R. 266, I would have voted ``Yea;'' on Roll Call No. 27 on the Passage of H.R. 266, I would have voted ``Nay;'' on Roll Call No. 28 on the Passage of S. 24, I would have voted ``Yea;'' on Roll Call No. 29 on the Passage of H.R. 221, I would have voted ``Yea;'' on Roll Call No. 30 on the Passage of H.R. 116, I would have voted ``Yea;'' on Roll Call No. 31 on the Passage of H.J. Res. 27, I would have voted ``Nay;'' on Roll Call No. 32 on the Passage of H. Res. 41, I would have voted ``Yea;'' on Roll Call No. 33 on the Passage of H.R. 135, I would have voted ``Yea;'' on Roll Call No. 34 on Ordering the Previous Question on H. Res. 43, I would have voted ``Nay;'' on Roll Call No. 35 on the Adoption of H. Res. 43, I would have voted ``Nay;'' on Roll Call No. 36 on the Passage of H.R. 190, I would have voted ``Yea;'' on Roll Call No. 37 on the Passage of Amendment No. 2 offered by Mr. McGovern (D- MA), I would have voted ``Nay;'' on Roll Call No. 38 on Ordering the Republican Motion to Recommit, I would have voted ``Yea;'' on Roll Call No. 39 on the Passage of H.R. 268, I would have voted ``Nay;'' on Roll Call No. 40 on the Adoption of H. Res. 52, I would have voted ``Nay;'' on Roll Call No. 41 on the Passage of H.R. 150, I would have voted ``Yea;'' on Roll Call No. 42 on the Passage of H.J. Res. 30, I would have voted ``Yea;'' on Roll Call No. 43 on Republican Motion to Recommit, I would have voted ``Yea;'' on Roll Call No. 44 on the Passage of H.R. 676, I would have voted ``Yea;'' on Roll Call No. 45 on the Passage of H.R. 328, I would have voted ``Yea;'' on Roll Call No. 46 on the Passage of H.J. Res 28, I would have voted ``Nay;'' on Roll Call No. 47 on the Passage of H. Res. 61, I would have voted ``Nay;'' on Roll Call No. 48 on the Republican Motion to Recommit, I would have voted ``Yea;'' on Roll Call No. 49 on the Passage of H.R. 648, I would have voted ``Nay;'' on Roll Call No. 50 on the Republican Motion to Recommit, I would have voted ``Yea;'' on Roll Call No. 51 on the Passage of H.J. Res. 31, I would have voted ``Nay;'' on Roll Call No. 52 on the Passage of H.R. 624, I would have voted ``Yea;'' on Roll Call No. 53 on the Passage of H.R. 502, I would have voted ``Yea;'' on Roll Call No. 54 on Approving of the Speaker's Journal, I would have voted ``Yea;'' on Roll Call No. 55 on the Motion to Adjourn, I would have voted ``Nay;'' on Roll Call No. 56 on the Passage of H.R. 428, I would have voted ``Yea;'' on Roll Call No. 57 on the Passage of H.R. 449, I would have voted ``Yea;'' on Roll Call No. 58 on the Passage of H.R. 769, I would have voted ``Yea;'' on Roll Call No. 59 on the Motion to Table the Motion to Reconsider H. Res. 77, I would have voted ``Nay;'' on Roll Call No. 60 on Ordering the Previous Question on H. Res. 87, I would have voted ``Nay;'' on Roll Call No. 61 on the Passage of H. Res. 87, I would have voted ``Yea;'' on Roll Call No. 62 on the Passage of Amendment No. 3 offered by Mrs. Trahan (D-MA), I would have voted ``Nay;'' on Roll Call No. 63 on the Republican Motion to Recommit, I would have voted ``Yea;'' on Roll Call No. 64 on the Passage of H.R. 790, I would have voted ``Nay;'' and on Roll Call No. 65 on the Passage of H. Res. 79, I would have voted ``Nay.''

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 624) to require the Securities and Exchange Commission to carry out a study of Rule 10b5-1 trading plans, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks on this legislation and to insert extraneous material thereon.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am delighted to rise in support of H.R. 624 and to recognize the bipartisan fashion in which this bill is being brought to the floor and, in particular, thank Ranking Member McHenry for his work on this bipartisan bill.

It is terrific to see the first bill out of the committee and onto the floor be not only a bipartisan bill, but the kind of thing that I think we should be able to find agreement on in this Congress.

We have a robust debate in the committee and in this Congress around the question of how we establish well-balanced regulation on the capital markets and the financial services industry. That is a good debate in which the answer is always moving, but it is terrific to see that we can agree that wherever there is an opportunity either for fraudulent behavior, insider trading, or rent-seeking to occur--that is to say, when there is an advantage for a particular player in the market--that the parties can come together to move legislation like

Mr. Speaker, I thank very much Madam Chairwoman for yielding, and, again, to the ranking member. It is a delight, as I said before, to come right out with a bipartisan bill that really addresses the fundamental question of confidence in our markets.

H.R. 624--and I will be proud to vote for it and urge my colleagues to do the same--closes a number of technical loopholes that have allowed corporate

insiders over time flexibility to actually trade possibly on inside information. That, of course, has the effect of causing regular investors to wonder whether they want to compete with that sort of player in the market.

H.R. 624 is a terrific bipartisan, thoughtful bill right out of the gates in the Financial Services Committee.

I want to just take 30 seconds, though, to reflect on the fact that at this point in time, there is currently no Federal law explicitly prohibiting insider trading. That requires the SEC and the Department of Justice to rely on general antifraud provisions in the law to go after people suspected of insider trading.

Mr. Speaker, in closing, I would just like to urge the committee, the chairwoman and the ranking member, to reflect on the words of U.S. District Judge Jed Rakoff, who wrote: ``But if unlawful insider trading is to be properly deterred, it must be adequately defined. The appropriate body to do so, one would think, is Congress.''

Mr. Speaker, I thank the chairwoman and ranking member for their hard work on this bill. I hope we can take it to the next step of making it very clear that insider trading itself is a crime for the lack of confidence that it generates in our capital markets.

Mr. Speaker, I again thank the chairwoman and the ranking member, and I urge passage of H.R. 624.

Mr. Speaker, I rise in support of H.R. 624, the Promoting Transparent Standards for Corporate Insiders Act, bipartisan legislation sponsored by Chairwoman Waters and Ranking Member McHenry.

Mr. Speaker, our Nation's financial markets are safer and more efficient when they are transparent.

Unfortunately, those that participate in insider trading damage the structure and integrity of our financial markets by engaging in practices outside of the public's view, profiting on information that is only known to a select few.

This nefarious practice damages ordinary, hardworking Americans who invest in pension funds, 401(k)s, mutual funds, and other retirement vehicles. As lawmakers, we must remain ever vigilant and seek to root out this illegal practice before it starts.

Currently, SEC regulations permit corporate insiders to evade insider trading rules by allowing them to adopt multiple trading plans and make select changes to their predetermined trading plans.

H.R. 624 closes this loophole by requiring the SEC to study and analyze the effectiveness of its current insider trading rules while also considering any rule change's impact on capital formation and a company's willingness to go public. Further, the bill requires the SEC report to Congress on its finding and draft rules consistent with the results.

This carefully crafted piece of legislation is an important step to closing a loophole in our Nation's insider trading laws.

Mr. Speaker, I want to take this opportunity to commend Chair Waters and Ranking Member McHenry for working in a bipartisan manner on this bill. I hope it is the first of many bipartisan bills we can bring to the floor from the Financial Services Committee in the 116th Congress.

Mr. Speaker, I urge the speedy adoption of this important measure.