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Corporate chieftains have long been suspected of skirting rules that are meant to prevent top executives from trading on inside information. Now, the Securities and Exchange Commission is cracking down, Bloomberg News reported. The regulator is addressing a controversial question: When should corporate insiders, who may have access to material non-public information, be allowed to sell stock? Currently, executives can set up sales just days before dumping shares, which Senator Elizabeth Warren and other lawmakers say enables them to front run corporate announcements that can move share prices. In response, the SEC on Wednesday unanimously proposed new rules that would force company insiders to wait roughly four months from when they schedule a trade before they sell. The agency will now seek public comment before it votes again to finalize the policies after taking into account that feedback. The current regulations, created two decades ago, were designed to help senior executives sell stock and avoid being accused of insider trading later. But recent academic research shows that stock-sale plans are rife with suspiciously-timed transactions. SEC Chair Gary Gensler said in June that these corporate policies had “led to real cracks in our insider trading regime.”

Wall Street's top financial regulators are investigating former U.S. President Donald Trump's $1.25 billion deal to float his new social media venture on the stock market, a filing showed, Reuters reported. Digital World Acquisition Corp, the blank-check acquisition firm that agreed to merge with Trump Media & Technology Group Corp (TMTG), disclosed in a regulatory filing on Monday that the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) were probing the deal. Digital World said the SEC asked for documents in early November relating to communications between Digital World and TMTG, meetings of Digital World's board, policies and procedures relating to trading, the identification of banking, telephone, and email addresses and the identities of certain investors. The SEC stated in its request that its investigation does not mean that the regulator has concluded that anyone violated the law, Digital World added.

The U.S. Securities and Exchange Commission (SEC) on Monday issued guidance to listed companies around how to properly recognize and disclose share-based compensation arrangements made to executives ahead of company earnings and other releases, Reuters reported. The regulator said that its new guidance spells out how companies must consider the impact such 'spring-loaded awards' would have on market-moving releases. "Companies should not grant spring-loaded awards under any mistaken belief that they do not have to reflect any of the additional value conveyed to the recipients from the anticipated announcement of material information when recognizing compensation cost for the awards," the agency said in staff guidance. Spring-loaded awards are share-based compensation arrangements where a company grants stock options or other awards shortly before it announces market-moving information such as an earnings release with better-than-expected results or the disclosure of a significant transaction. Non-routine, spring-loaded grants merit particular scrutiny by those responsible for compensation and financial reporting governance at public companies, the SEC said of its new guidance.

The U.S. Securities and Exchange Commission's enforcement actions against public companies fell to a seven-year low in the 2021 fiscal year, even as monetary settlements rose slightly, according to research published yesterday. The top U.S. markets regulator filed 53 enforcement actions against public companies and subsidiaries in the year ended September 30, 32% below the prior five-year average and the lowest level since 2014, according to data compiled by New York University and Cornerstone Research. The decline coincided with the continued coronavirus pandemic and a transition to Democratic leadership. Enforcement activity tends to fall the year a new chair takes the helm at the agency. SEC chair Gary Gensler, known for being tough on Wall Street, joined the agency in mid-April. While there are signs the agency is taking an increasingly aggressive posture with Wall Street and corporate America, the SEC's enforcement director earlier this month warned that the agency's fiscal 2021 numbers would show a decline in enforcement activity. Monetary settlements imposed in public company or subsidiary actions totaled $1.8 billion, with $835 million from disgorgement and interest, Wednesday's report showed.

The U.S. Securities and Exchange Commission on Wednesday published new staff bulletins that may make it harder for corporations to exclude shareholder proposals on major social issues - such as race, diversity and climate change - from corporate ballots, Reuters reported. The new bulletins replace Trump-era guidance that demanded companies take more steps to disclose how they craft their shareholder recommendations. Critics said that change aimed to stifle shareholders' voices. Shareholder voting rights have become a major bone of contention in recent years as more investors have pushed companies to take up social and environmental issues. The SEC bulletin said staff would revise the way they determine whether a shareholder proposal relates to the ordinary business of a company - which is the general standard for assessing such proposals - including by considering whether it raises significant social policy issues. It said its rules have always allowed an exception for considering whether proposals relate to issues that transcend the company's daily business, but the new bulletin more explicitly clarifies how it would apply that analysis. "Staff will no longer focus on determining the nexus between a policy issue and the company, but will instead focus on the social policy significance of the issue that is the subject of the shareholder proposal," said the SEC bulletin published by the staff of the Division of Corporation Finance.

Luckin Coffee Inc. reached a $175 million settlement of shareholder class-action claims that the Chinese rival to Starbucks fraudulently inflated its share price by falsifying revenue, Reuters reported. Lawyers for the shareholders called the all-cash settlement, filed on Monday night, an “excellent result,” citing Luckin’s liquidation proceeding in the Cayman Islands and its related filing for protection under the U.S. Bankruptcy Code. The accord also covers Luckin officials, as well as underwriters of the Xiamen, China-based company’s $645 million initial public offering in 2019 and a later offering of American depositary shares. U.S. District Judge John Cronan in Manhattan approved the preliminary settlement on Tuesday and scheduled a Jan. 31, 2022, hearing to consider final approval. The settlement also requires approval by a Cayman Islands court. Founded in 2017, Luckin ended March with about 5,000 stores. Shareholders sued Luckin in February 2020, two weeks after short-seller Muddy Waters Research accused it of inflating revenue. Two months later, Luckin’s share price sank 81% after the company said an internal probe found that its chief operating officer and other staff fabricated about $310 million of sales in 2019, or about 40% of annual sales projected by analysts. Luckin agreed last December to pay a $180 million fine to settle U.S. Securities and Exchange Commission accounting fraud civil charges.

Clawing back compensation is shaping up to be a key part of the U.S. Securities and Exchange Commission's (SEC) agenda as it cracks down on corporate misconduct, raising the stakes for thousands of executives who could potentially lose millions of dollars in bonuses and stock sale profits, Reuters reported. Last week, the SEC said that it would revive a rule left unfinished from the 2007-09 financial crisis that would require U.S.-listed companies to implement a plan to recoup executive compensation in the event they have to correct financial statements due to compliance failures. But in behind-the-scenes enforcement talks with companies, the SEC has already dusted off a narrower clawback power created in 2002 following the Enron and WorldCom accounting scandals, according to four lawyers familiar with the private discussions. That rule allows the SEC to force a public company's chief executive or chief financial officer to return bonuses or other incentive-based pay in the event the company restates its results due to misconduct. In 2016, a federal court settled a lingering question over whether the SEC could recoup pay from executives who were not directly accused of wrongdoing. It said the agency could, because the executives should not profit from the proceeds of foul play. In nearly two decades, however, the SEC has used the 2002 clawback power sparingly overall, despite potentially hundreds of opportunities to so, and just 15 times to penalize executives who were not directly accused of misconduct, according to a new analysis by law firm Covington and Burling LLP.