2023
Salesforce’s Benioff Cashing Out at Rate of $3 Million a Day
Marc Benioff’s cash pile grows a bit every day, thanks to a unique selling strategy unlike any other billionaire tracked by the Bloomberg Billionaires Index. Since July, the Salesforce Inc. co-founder has been selling 15,000 shares of the software company’s stock — about $3 million worth — almost daily. Including a smaller selling streak earlier in the year, Benioff has unloaded more than $475 million worth of shares in 170 or so transactions. His strategy of taking a little bit off the table every day dates to soon after Salesforce’s 2004 initial public offering, with Benioff making more than 200 sales the following year, records show. He’s continued the strategy since, which Benioff said helps fund charitable gifts to pediatric hospitals, public schools and medical research, among others.
Why Insider Trading is Difficult to Stop
Martha Stewart was famously accused of insider trading in the early 2000s, but she didn’t face criminal insider trading charges. Instead, Stewart was found guilty and went to prison for obstruction of justice, conspiracy and making false statements. This prosecutorial choice may have been due to how the law is written. “It is incredibly difficult to prove an insider trading case,” said Daniel Taylor, a forensic accounting professor at the University of Pennsylvania. “Congress has never actually defined what insider trading was and explicitly outlawed it.”
SVB CEO Sold $3.6 Million in Stock Days Before Bank’s Failure
There’s nothing illegal about corporate trading plans like the one Becker used. The plans were set up by the Securities and Exchange Commission in 2000 to thwart the possibility of insider trading. The idea is to avoid malfeasance by limiting sales to predetermined dates on which an executive can sell shares, and the timing could merely have been coincidental. However, critics say the prearranged share-sale plans, called 10b5-1 plans, have significant loopholes, including that they lack mandatory cooling-off periods.
“While Becker may not have anticipated the bank run on Jan. 26 when he adopted the plan, the capital raise is material,” said Dan Taylor, a professor at the University of Pennsylvania’s Wharton School who studies corporate trading disclosures. “If they were in discussion for a capital raise at the time the plan was adopted, that is highly problematic.”
New SEC Rules Target Corporate Insider Trading
For the last two decades, officers and directors at U.S. public companies seeking to trade illicitly on inside information had an almost infallible get-out-of-jail-free card. All they had to do was use prearranged trading plans when they bought and sold their companies’ shares. The odds the government would target them for enforcement actions were slim. It was an unintended consequence of a regulation adopted in 2000 called Rule 10b5-1 that academic research shows was abused by some executives. That regime is about to change. A new Securities and Exchange Commission rule promises to remove many of the loopholes that allowed corporate insiders to hide behind these trading plans. For most U.S.-listed companies, new disclosure requirements will kick in April 1.
Elon Musk defends his old tweets in securities fraud trial
Tesla CEO Elon Musk appeared in a San Francisco federal court on Friday to defend tweets he posted to his tens of millions of followers in August 2018... Daniel Taylor, director of the Wharton Forensics Analytics Lab and professor at the University of Pennsylvania, analyzed every trade in Tesla stock occurring on Aug. 7, 2018, the day that Musk tweeted. Taylor found that the trading volume the minute Musk tweeted, at 12:48 p.m. ET that day, was over $350 million, and the trading volume for Tesla shares the next minute was over $250 million. By comparison, the average volume five minutes before Musk tweeted was $32 million per minute. The minute before Musk tweeted, trading volume was $24 million. “It is generally true that correlation is not causation,” Taylor told CNBC on Friday, after Musk’s first day on the witness stand. “However, I am unaware of any alternative explanation for a 10-fold increase in trading volume the same minute that Elon Musk tweeted.”
2022
SEC Toughens Insider Trading Rules for Execs, Limits Protections
The SEC is restricting when top executives can unload company shares and is forcing them to disclose more information about their planned stock sales as part of a renewed effort to combat insider trading. The Securities and Exchange Commission on Wednesday voted unanimously to adopt rules that will require company directors and officers to wait at least 90 days between when they schedule a trade and sell their shares....
The updates to Rule 10b5-1 follow years of news reports and academic research about company officials’ suspiciously well-timed trades. Scheduled stock sales using so-called 10b5-1 plans are common, but executives’ cooling-off periods vary. Company officials waited between two and three months on average to trade, with some making sales within 30 days of enacting a 10b5-1 plan, according to a 2021 study by Stanford University professor David Larcker, University of Pennsylvania professor Daniel Taylor and other academics.
Carvana CEO’s Net Worth Skids But His Dad, Who Controls Company, Is Worth Nearly $3 Billion
Shares of used car retailer Carvana plunged 43% Wednesday following reports that the company’s two largest creditors, private equity firm Apollo and investment manager PIMCO, entered an agreement to work together in any negotiations with Carvana, which many investors interpreted as a sign of the used car dealer’s impending declaration of bankruptcy. Carvana has not commented on that possibility. No one has lost more than Ernest Garcia III, the 40-year-old founder and CEO of Carvana. His fortune soared to over $11 billion at Carvana’s peak in August 2021. Carvana’s shares, following the company’s pandemic-fueled boom and subsequent crash, are down 99% from that time. Garcia III sold a little stock in late 2020, but has also bought back shares at various times, offsetting any investment gains. His stake is now worth less than $200 million today.
FTX Auditors Doubled as Crypto Industry Cheerleaders
...Weak internal financial controls at FTX might have contributed to its failure. The company lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research. FTX suffered a “complete failure of corporate controls and…a complete absence of trustworthy financial information,” Mr. Ray’s court filing said. “If there had been a rigorous internal control audit done at the standards of what’s typically done by the Big Four [accounting firms], it would have revealed significant deficiencies in FTX’s internal controls,” said Daniel Taylor, director of Wharton Forensic Analytics Lab at the University of Pennsylvania. “And it is likely that the [financial problems] would have been revealed earlier.”
Ryan Cohen’s Bed Bath & Beyond Stock Sales Highlight Gray Area in Disclosure
Investor Ryan Cohen might have run afoul of disclosure guidelines in his surprise sale of Bed Bath & Beyond Inc. stock this month, securities lawyers said, but regulatory action against him appears unlikely. Mr. Cohen sold his entire stake in the home-goods retailer on Aug. 16 and 17, just months after he took a significant position in the company and pledged to force changes there. Shares tumbled after news of his sales came out on the afternoon of the 17th, but meanwhile Mr. Cohen benefited from a huge surge in volume that enabled him to sell millions of shares while prices rose. …
“The apes have a target on their back,” said Daniel Taylor, an accounting professor at the University of Pennsylvania’s Wharton School of Business who studies insider trading. “It’s either the CEOs of the companies who are going to exploit that or these outside individuals like Ryan Cohen.”
Why Bed Bath & Beyond shares surged this week, then fell
After becoming a meme-stock favorite earlier this year, Bed Bath & Beyond shares tumbled on Wednesday, set off by a sudden turnabout from an activist investor. The investor, Ryan Cohen, made a filing on Monday describing his options to purchase the retailer’s shares at sky-high prices that sent the stock soaring as much as 70 percent. Then on Wednesday, he filed a registration document that would allow him to sell all of his 10 percent stake in the company. Investors reacted by selling off stock, which was down about 22 percent in afternoon trading on Thursday.
SoftBank raises $22bn in moves to sell down Alibaba stake
SoftBank has raised as much as $22bn in cash from deals that would sharply reduce its stake in Alibaba over the coming years, as the Japanese investor responds to a market downturn that has ravaged its technology portfolio. The group, led by billionaire founder Masayoshi Son, has this year carried out the sale of about one-third of its Alibaba stake through prepaid forward contracts — a type of derivative to which SoftBank has increasingly turned to raise cash immediately while retaining the possibility of holding on to the shares. SoftBank has now sold more than half its Alibaba holdings through these forward sales.
CEO Stock Sales Raise Questions About Insider Trading
Prearranged trading plans, created by a regulation put in place two decades ago, have become a popular way for top executives and other company insiders to sell shares. Under the rule, corporate insiders can be shielded from allegations of trading on inside information as long as they sell using an automated trading plan set up when they didn’t know about any impending news. The rule allows these arranged trades to begin immediately.
A Wall Street Journal analysis of 75,000 prearranged stock sales by corporate insiders, using a comprehensive compilation of the data, shows that about a fifth of them occurred within 60 trading days of a plan’s adoption. The timing in aggregate made the trades more profitable: On average, those trades preceded a downturn in share price more often than when insiders waited longer to trade, the analysis found.
SEC Forces Executives to Put Trading Plans Online
The SEC will require executives looking to sell company stock to enter information about their trading plans into the agency’s public corporate filings database, instead of mailing it to the agency.
Company officials currently can submit their trading details to the Securities and Exchange Commission on paper, usually turning down the option to enter the information into the agency’s online EDGAR database. Most of the paperwork is only available for the public to review in the agency’s reading room.
The new rule adopted Friday after a unanimous commission vote comes as the agency is heightening its scrutiny of potential insider trading. The agency released a proposal last year that would force executives to be more careful about unloading company stock.
Airbnb Founders Have Sold More Than $1 Billion Worth Of Stock
It’s been a rollercoaster ride for shares of Airbnb since the online home rental firm went public in December 2020. Shares rose in the second half of last year, peaking at just over $207 in November. Now they’re trading for about 50% less, following a decline in many U.S. stocks. One of Airbnb’s three billionaire cofounders has continued to sell shares monthly despite the stock plunge. It’s unclear if his trading plan was modified or if he created a new one. The SEC proposed stricter disclosure rules on predetermined trading plans in December last year, but still needs to approve them. “Other than that deviation, it looks like he’s following this monthly sale strategy,” says Daniel Taylor, an accounting professor at the University of Pennsylvania’s Wharton School.
Carvana Insiders Including The CEO’s Billionaire Father Are Buying Up Shares As Stock Hits Lows
It's been a rough couple of months for Carvana. In April the embattled used car retailer reported its first-ever decrease in quarterly sales. On May 10, the company laid off 2,500 employees, or 12% of its workforce. … “Carvana’s actions and the actions of the executives signal to me that the executives knew what was coming, and consequently took advantage of the lofty valuations to both sell their own equity and to issue equity,” says Dan Taylor, an accounting professor at the Wharton School who leads the Wharton Forensic Analytics Lab.
Musk, Twitter Hit With Investor Suit Over Buyout Balk
Elon Musk and Twitter Inc. have been hit with a proposed shareholder class action alleging that the billionaire tried to create doubt about his planned deal to buy the social media company in order to do so at a lower price, causing Twitter's valuation to drop by $8 billion. ... Heresniak alleged that failing to file the necessary form allowed Musk to continue buying Twitter shares at depressed prices ... "Musk likely saved more than $143 million by not reporting that his trades had crossed the 5% threshold … since the share price could have been higher had the market known of Musk's growing stake," the complaint said, citing Daniel Taylor, an accounting professor at the University of Pennsylvania.
Carvana’s ‘Chaotic’ Zoom Firing Caps Company’s Struggles Amid Market Downturn
2022 has been a rude wakeup call. Inflation has hit the business hard, as prices for both used cars and gas have lowered demand from would-be car buyers. Rising interest rates have also made buying a car more expensive—and weighed on Carvana’s loans securitization business, which before had padded the company’s gross profitability. “Carvana is getting hit much harder with the rise in rates than your typical car dealer, because they are relying on that financing flow to feed their business, and that is obviously very interest rate sensitive,” says Daniel Taylor, an accounting professor at the Wharton School, who compares Carvana to a subprime mortgage lender during the 2000s housing bubble. “You sell houses for the purposes of originating mortgages and then distributing those mortgages to investors. Carvana is in the originator distributor business—originating car loans and selling those loans is its primary business.”
Elon Musk proves once again that the rules don’t apply to him
Musk’s previous big battle with the SEC back in 2018, when he tweeted that he had “funding secured” to take Telsa private, sending shares higher, only emboldened the billionaire. Musk eventually paid a $20 million fine and gave up his position as chairman of Tesla, although he kept the CEO title, which the SEC had threatened to strip him of as well. He also has to have tweets with material information about Tesla approved by others at the company, but it’s not clear how closely he has complied with that requirement over the last four years. ...But Taylor said the action by the SEC amounted to little more than a slap on the wrist. “They had the opportunity to send a strong signal and chose not to,” Taylor said.
Musk Stuff
The Tesla Inc. chief executive made his filing on April 4, at least 10 days after his stake surpassed the trigger point for disclosure. Mr. Musk hasn’t publicly explained why he didn’t file in a timely manner. …
Mr. Musk likely saved more than $143 million by not reporting that his trades had crossed the 5% threshold, said Daniel Taylor, a University of Pennsylvania accounting professor, since the share price could have been higher had the market known of the billionaire’s growing stake.
Elon Musk’s Belated Disclosure of Twitter Stake Triggers Regulators’ Probes
Based on Twitter’s closing price of $49.97 on April 4, the day Mr. Musk disclosed his stake, he likely saved more than $143 million on those trades, Dr. Taylor estimated. “The case is easy. It’s straightforward. But whether they’re going to pick that battle with Elon is another question,” said Dr. Taylor, referring to the prospect of a regulatory lawsuit against the outspoken entrepreneur.
US investors take aim at insider share sale plans
Abbott Laboratories became a household name at the start of the pandemic after it quickly developed a rapid Covid-19 test. But now the company is drawing investor attention for another reason: insider stock sales. At Abbott’s annual general meeting on Friday, investors will vote on a first-of-its-kind shareholder proposal, which asks the company to disclose more information about transactions conducted using so-called 10b5-1 plans. These plans allow executives to divest shares according to a preset schedule filed with the US Securities Exchange Commission without falling foul of insider trading rules. But the SEC and some investors are worried that they are open to misuse.
Chinese Executives Sell at the Right Time, Avoiding Billions in Losses
Chinese corporate insiders have avoided billions of dollars in losses by making well-timed share sales over the past several years, according to an academic analysis of securities filings. Insiders at companies based in China but listed on a U.S. exchange avoided at least $10 billion in losses on trades made between 2016 and mid-2021 by selling stock ahead of significant price declines, the researchers found.
Moderna CEO has sold more than $400 million of company stock during the pandemic
In February 2021, Democratic Sens. Elizabeth Warren of Massachusetts, Chris Van Hollen of Maryland, and Sherrod Brown of Ohio called on the SEC to reform the 10b5-1 rule to provide greater transparency. Last December, the SEC proposed several changes such as requiring companies to disclose in their quarterly reports the adoption or termination of 10b5-1 plans and the terms of the stock trading arrangements. Those changes have not yet been adopted. “The reason people are so interested is because there’s this lack of transparency that is mandated by the SEC,” Taylor said. “If [Bancel] had disclosed the plan in 2018, would we really be so interested in his stuff? I think the answer is probably no.”
Accountant Shortage, Resignations Fuel Financial Reporting Risks
Corporate finance teams and their outside auditors are powering through this financial reporting season with fewer staff on hand to deliver accurate financial statements to investors. Accountants are leaving jobs in record numbers, at both corporations and audit firms, joining the broad swath of workers re-evaluating what they want from their careers. Some are leaving the profession entirely. Others may take advantage of a tight labor market to seek higher salaries and more flexible schedules. In the rush to meet Securities and Exchange Commission filing deadlines, with more work piled on the shoulders of fewer people, important checks may be skipped, errors go unnoticed, and assumptions unchallenged.
Peloton insiders sold nearly $500 million in stock before its big drop
Peloton insiders were not alone in their selling during last year’s soaring stock market. With large stock sales from prominent executives such as Jeff Bezos and Elon Musk, total selling reached a record $170 billion last year, up from $94 billion in 2020, according to SmartInsider. Historically, corporate executives and insiders sell during or near highs in their stock price. “One of the most well-accepted facts from decades of research on insider trading is that corporate insiders buy near bottoms and sell near peaks,” said Daniel Taylor, an associate professor at the Wharton School.
2021
Lax rules are allowing corporate fat cats to dump stock
Company founders and executives are hearing the jingle of cold hard cash this holiday season. Profiting from a historic run up in share prices, US corporate insiders sold a record $69bn in shares this year, up 30 per cent from 2020, and 79 per cent more than the 10-year average. Almost 50 of these corporate bigwigs have pocketed more than $200m each.
Executive Stock Sales Face More Scrutiny as SEC Tightens Rules
An SEC proposal to curb insider trading would force executives to be more careful about selling company stock, as their scheduled trades face longer waiting periods and greater scrutiny from Wall Street cops and investors. ... The agency also would require companies to disclose executives’ trading plans in quarterly reports. The proposed rule is a “big deal” and would limit an SEC enforcement shield that company officials can use to sell stock quickly with little oversight...
SEC's Stunning Trial Loss Rattles Its Insider Trading Strategy
The U.S. Securities and Exchange Commission's shocking defeat in a recent insider trading trial marks a rare snub of the agency's time-tested reliance in court on statistical evidence of suspicious trading. In a near-unheard-of move Monday, a Virginia federal judge ended the SEC's trial against Christopher Clark without hearing Clark's arguments or allowing the jury to weigh in, finding that the SEC hadn't offered persuasive circumstantial evidence ...
U.S. SEC to tighten insider trading rules, boost money market fund resilience
The U.S. Securities and Exchange Commission (SEC) on Wednesday proposed tightening a legal safe-harbor that allows corporate insiders to trade in a company's shares, and other rules to improve the resilience of money market funds. The agency also unveiled measures to increase transparency around share buybacks and the complex derivatives at the center of New York-based Archegos Capital Management's meltdown earlier this year.
SEC Proposes Tighter Rules on Insider Trading, Stock Buybacks
Wall Street’s regulator is putting forward tighter rules on how and when corporate insiders can sell their companies’ stocks, just as executives are cashing in at historic levels. The Securities and Exchange Commission proposed new restrictions on executive stock trading and greater disclosure requirements around company share buybacks at a meeting Wednesday.
SEC Floats Rules to Shore Up Money Markets, Curb Insider Trading
The Securities and Exchange Commission issued a raft of proposals Wednesday including measures aimed at shoring up money-market funds and curbing executives’ ability to trade their own companies’ stock... The SEC also proposed significant restrictions on arrangements, known as 10b5-1 plans, by which corporate officers and directors schedule stock trades ahead of time to avoid running afoul of insider-trading rules. Among other changes, the agency would require executives to wait 120 days before buying or selling their employer’s stock after setting up or modifying the plans.
Elon Musk, Other Leaders Sell Stock at Historic Levels as Market Soars, Tax Changes Loom
Company founders and leaders are unloading their stock at historic levels, with some selling shares in their businesses for the first time in years, amid soaring market valuations and ahead of possible changes in U.S. and some state tax laws. ... Across the S&P 500, insiders have sold a record $63.5 billion in shares through November, a 50% increase from all of 2020, driven both by stock-market gains and an increase in sales by some big holders. The technology sector has led with $41 billion in sales across the entire market, up by more than a third, with a smaller amount but an even bigger increase in financial services. and directors.
Five legal questions raised by Elon Musk's unorthodox share sales
It's been another wild ride for Tesla investors after billionaire chief executive Elon Musk pledged via Twitter to sell 10% of his shares in the company. While the unorthodox way he went about it has raised eyebrows, it's unclear if he or Tesla have broken any rules. The electric carmaker lost more than $150 billion in value after Musk asked his Twitter followers over the weekend if he should sell 10% of his Tesla stake to pay new taxes being discussed by Congress. Nearly 58% said he should.
How China’s tech bosses cashed out at the right time
In China, there is no clearer sell-sign than when Xi Jinping, the Chinese president, starts personally attacking an industry. So when Xi complained in March that relentless home-schooling was a “stubborn disease” that was putting too much pressure on Chinese children and their parents, the heads of at least two Chinese tutoring companies started selling their shares in New York. In one previously unreported trade, a shell company holding shares for executives at GSX Techedu, whose market capitalisation in New York was about $24bn at the time, launched the sale of shares worth as much as $119m just three days after Xi spoke. The sale is among hundreds of records reviewed by the Financial Times that provide one of the first looks at how and when executives at China’s biggest New York-listed tech companies trade their shares.
Money Stuff: Insiders Are Good at Trading
“The basic problem,” I once wrote, “is that, if you are a senior executive at a public company, you always know stuff about your company that the public doesn’t know, but you might want to sell stock sometimes.” This is a real and hard problem. If you are the chief executive officer of a public company, every single minute of every day you know more about that company than the average retail investor does. If the standard was “you can never sell stock if you know anything the public doesn’t know,” you could never sell stock.
Redditors Are Right About the Unfairness of the Market
Wharton Professor Taylor’s research has shown that corporate insiders consistently dumped holdings before official legal probes hurt their company’s shares, Businessweek reported. They also increased their buying and selling in the gaps between audit reports being produced for company boards and being made publicly available, and exploited rules governing scheduled trading schedules for profit. His analysis suggests the existing regulations governing insider trading are inadequate. It also implies that the Securities and Exchange Commission is asleep at the wheel: The watchdog instigated only 33 insider trading cases last year and just 32 in 2019, the fewest in more than two decades, according to Businessweek.
'Most Americans Today Believe the Stock Market Is Rigged, and They’re Right'
In theory, the law governing insider trading is clear-cut: Under the Securities Exchange Act of 1934, executives who abuse their access to nonpublic information, either by trading on it themselves or passing it along to someone else, can be charged with fraud and sent to jail. But regulators and lawyers say identifying and prosecuting the offense is deceptively difficult, and lawmakers as diverse as Democratic Senator Elizabeth Warren of Massachusetts and Republican Representative Elise Stefanik of New York, prodded on by Taylor and other researchers, have been calling for reform.
CEO’s Dad Gets a $3.6 Billion Stock Windfall at Carvana
Company filings show Ernie Garcia II, the father of Carvana Co.’s chief executive officer, has sold more than $3.6 billion of stock since October. The sales amount to 16% of his holdings in the company. He has benefited from an ownership structure that confers benefits on him and his family and allows them to maintain control of the business, according to company filings. Some of these benefits can come at the expense of other shareholders, according to the filings, a lawsuit, and corporate governance and tax analysts.
SEC Is Investigating Electric Delivery-Truck Maker Workhorse
The Securities and Exchange Commission disclosed in a letter denying a public-records request that its enforcement division has been probing Workhorse, according to a copy of the letter reviewed by The Wall Street Journal... Publicly traded companies aren’t legally required to disclose federal investigations into their business. A recent study in the academic journal Management Science found that 19% of public companies initially report such probes to investors...
SEC's 'Shadow Trading' Suit Dives Into Murky Area Of Law
The U.S. Securities and Exchange Commission is entering uncharted legal waters with an insider trading suit against a biopharmaceutical executive for allegedly engaging in a practice that's become known as "shadow trading," experts told Law360. The securities regulator claimed in California federal court on Tuesday that former Medivation Inc. business development head Matthew Panuwat committed fraud when he bought short-term stock options in a rival biopharmaceutical company "within minutes" of learning his own company was going to be acquired ...
Executive Stock Sales Are Under Scrutiny. Here’s What Regulators Are Interested In.
Securities regulators are rethinking rules on popular plans that let corporate executives sell stock without violating insider-trading provisions. The plans—known as 10b5-1 plans—allow executives to create schedules for buying and selling shares in the future. In theory, a predetermined sale, even if it comes at a fortuitous time, wouldn’t be based on inside information. But years of research has shown that the reality is more complicated ...
Corporate insiders’ well-timed share sales raise concerns
When company insiders have used pre-arranged stock trading schemes to quickly sell $50m or more in a single day, the company’s stock subsequently underperformed its peers by 3.19% over the next month, and 5.75% over the next six months, according to research conducted by Daniel Taylor, an accounting professor at The Wharton School and director of its Forensic Analytics Lab. ...
Sens. Push Bill To Tighten SEC's Insider Trading Rules
A pair of senators on Monday revived a bipartisan bill that aims to place new restrictions on the safe harbor that helps corporate executives avoid insider trading accusations when they trade their company's stock. ... The University of Pennsylvania's Wharton School produced a report in January showing that 10b5-1 plans have been used by executives to engage in "opportunistic, large-scale" sales of company stock. ...
Lordstown Motors Executives Sold Stock Ahead of Reporting Results and Before Troubles Came to Light
Several top executives at Lordstown Motors Corp. sold off chunks of stock in the electric-truck startup ahead of reporting financial results, according to regulatory filings disclosing the transactions. Securities lawyers and accountants say such trades raise questions about the company’s internal controls, especially in light of its recent troubles.
SEC's Eye on Exec Trading Plans Should Keep Issuers Wary
Public companies be warned — the U.S. Securities and Exchange Commission's recent drive to overhaul the rule that helps corporate executives dodge insider trading accusations could translate to more scrutiny from the agency's enforcement division, experts told Law360. Under Rule 10b5-1 corporate stock plans, corporate insiders who may have access to material nonpublic information schedule stock trades at predetermined times to avoid undue scrutiny. SEC Chairman Gary Gensler said earlier this month that the plans have led to "real cracks in our insider trading regime" due to a lack of limitations and disclosure requirements. ...
SEC aims to stop insiders dumping stock before the bad news hits
It seems the great trading edge enjoyed by corporate insiders is knowing when to sell. That makes sense. There are many brokers and business-TV guests with stock buying tips, but few who will urge you to sell now, before the bad news comes out.
SEC targets corporate insider-trading loopholes with potential rules, enforcement review
The U.S. Securities and Exchange Commission has taken aim at the insider trading practices of corporate executives by working on rule changes and a review of potential abuses of existing rules governing stock trading plans. The initiative surfaced on Monday in comments by SEC Chairman Gary Gensler in an interview. ...
Corporate Bosses Make Well-Timed Stock Sales in SEC ‘Blind Spot’
A growing body of academic research shows an arcane government program that’s supposed to help senior executives buy and sell shares properly and avoid unnecessary scrutiny is rife with well-timed transactions. As SEC Chair Gary Gensler put it last week, the agency’s loose rules have led to “real cracks” in its surveillance of potential insider trading.
Money Stuff: 10b5-1 plans
Everyone knows how you can abuse 10b5-1 plans, right? Corporate executives are not supposed to trade their company’s stock when they have inside information. This is sort of a hard rule to follow, since corporate executives are constantly getting inside information to do their jobs, and sometimes they need to sell stock to pay for their kids’ college or whatever.
SEC Chair Aims To Seal 'Cracks' In Exec Insider Trading Rules
The U.S. Securities and Exchange Commission is working to overhaul the rule that shields corporate executives from insider trading accusations when they buy or sell their company's stock, the regulator's chairman said Monday. At an event Monday, SEC Chair Gary Gensler said those plans have led to "real cracks in our insider trading regime" that could be shored up with new disclosure requirements and limitations that agency staff are currently mulling. ...
SEC Chairman Calls for New Restrictions on Executive Stock-Trading Plans
The Securities and Exchange Commission is drafting a proposal that would restrict plans that corporate insiders use to avoid insider-trading claims when buying or selling their own company’s stock. Speaking Monday at The Wall Street Journal’s CFO Network event, SEC Chairman Gary Gensler said he is seeking to revise rules that govern the arrangements, known as 10b5-1 plans. ...
No one is policing corporate America, and white-collar crime is on the rise
The SEC is supposed to be one of the cops monitoring businesses in the US and policing white-collar crime. When a corporation commits fraud - that is to say, steals from its customers or vendors, or lies about the state of its business - regulators could punish wrongdoers with Old Testament justice, sending a message to corporate America that criminal misbehavior will not be tolerated. But instead of fulfilling their duties, watchdogs like the SEC have seemingly given up on the task. ...
Under Armour founder sold $138 million in stock during time period company allegedly misled investors about slowing sales
The apparel maker’s $9 million settlement with the SEC was cited in a class-action lawsuit accusing former CEO Kevin Plank of profiting from the company’s ‘deliberately inflated’ valuation. ...
Op-Ed: Insider Trading Loopholes Need to Be Closed
Current rules still allow executives to time their share sales to maximize gains. SEC Commissioner Caroline Crenshaw and Wharton Professor Daniel Taylor see a "cooling off period" as one solution.
PwC to Defend Audit Work, Independence in Whistleblower Trial
PwC will try to convince a San Francisco judge that its Silicon Valley staff acted appropriately in the audits of two tech companies and that it rightly fired a whistleblower. The firm faces defending its reputation and commitment to independence from its clients in a bench trial set to begin Monday. ...
Novavax Bosses cash out $46 mln with COVID-19
Top executives at U.S. pharmaceutical company Novavax Inc. aren't waiting to see how well their COVID-19 vaccine works before they reap the financial rewards...
2020
Op-Ed: How the SEC can and should fix insider trading rules
Most of the media attention has focused on trades by individual executives — little attention has been paid to the lax SEC rules that surround these plans and provide the opportunity for abuse. The Securities and Exchange Commission (SEC) should reform its current policies and practices that contribute to these abuses. ...
Investors in breached software firm SolarWinds traded $280 million in stock days before hack was revealed
Top investors in SolarWinds, the Texas-based company whose software was breached in a major Russian cyberattack, sold millions of dollars in stock in the days before the intrusion was revealed. The timing of the trades raises questions about whether the investors used inside information to avoid major losses related to the attack. SolarWinds’s share price has plunged roughly 22 percent since the company disclosed its role in the breach Sunday night. ...
Good Disclosure Requires More Enforcement, SEC Panel Told
Regulators should consider increasing enforcement to ensure that corporate disclosures detailing risks caused by the coronavirus pandemic meet a consistent level of quality, an accounting professor told a U.S. Securities and Exchange Commission panel. Wharton professor Daniel Taylor said Thursday that his research noted that companies of certain industries have experienced similar shocks in terms of stock drops resulting from the pandemic, but the informativeness of their disclosures have varied. He suggested regulators focus attention on this matter to prevent a "race to the bottom" in terms of reliability. ...
Good vaccine news and a flurry of stock sales by executives. There’s a pattern, study finds
As they raced to develop vaccines against COVID-19, executives at some pharmaceutical companies received huge paydays by selling shares around the time their companies announced positive news about the vaccines. ...
Stock Sales By Leaders At Coronavirus Testing Company Raise Legal Concerns
Early on in the coronavirus pandemic, as governments scrambled to find rapid and reliable coronavirus tests, three states ended up turning to a small public company that just months earlier had no major customers and was losing millions of dollars. ...
Pfizer CEO Sold Millions In Stock After Coronavirus Vaccine News, Raising Questions
The chairman and CEO of Pfizer, Albert Bourla, sold $5.6 million worth of stock in the pharmaceutical company on Monday. The sale took place on the same day Pfizer announced that its experimental coronavirus vaccine candidate was found to be more than 90% effective. The company's stock soared on the news. ...
Regeneron board member and executive sell $1 million in stock after Trump touts treatment
A Regeneron executive and one of its directors sold $1 million worth of stocks two days after President Donald Trump announced he was taking their therapeutic, recent filings from the Securities and Exchange Commission reveal. ...
Opposition to SEC’s 13F proposal builds as comment deadline passes
As the formal comment period for the SEC’s proposed changes to the 13F filing thresholds closed, the commission had received more than 1,800 comment letters from issuers, stock exchanges, institutional and retail investors and academics – with the majority of the letters in opposition to the proposal. ...
'Bad Optics' Or Something More? Moderna Executives' Stock Sales Raise Concerns
Whether the coronavirus vaccine developed by Moderna succeeds or not, executives at the small biotech company have already made tens of millions of dollars by cashing in their stock. An NPR examination of official company disclosures has revealed additional irregularities and potential warning signs. ...
German fintech star Wirecard said $2 billion went 'missing' from its bank accounts
This week Wirecard announced that $2 billion had gone "missing" from its balance sheet. The company's former CEO, Markus Braun, resigned and was arrested on suspicion of false accounting and market manipulation. Business Insider spoke to fintech analysts and academics who study accounting fraud to figure out how that $2 billion might have disappeared. ...
Op-Ed: Congress must open a second front in our economic war on COVID-19
The United States is at war. We face an enemy, COVID-19, that has already killed 45 percent more Americans than the Vietnam, Korean, Iraq and Afghanistan wars combined. This enemy has created countless personal tragedies, divided the nation, and is attacking the engine of our economic growth. ...
Money Stuff: 40% of everything is securities fraud
Everything, I like to say, is securities fraud: If a public company does a bad thing, or if a bad thing happens to it, shareholders can sue it for fraud. It didn’t disclose the bad thing as soon as it happened, or if it did it didn’t adequately warn about the bad thing in advance, so shareholders were deceived, and when it did disclose the bad thing the stock went down, so the shareholders sue.
Op-Ed: Are you angry with the Fed? You should be
In widely circulated remarks, Federal Reserve Chairman Jerome Powell recently stated that the Fed’s COVID-19 response is “absolutely not” contributing to income inequality. But our data indicate that Powell’s statement is absolutely wrong. ...
U.S. corporate crisis bailouts may prove bonanza for insider trading, new study warns
White-collar crime prosecutors and defense attorneys are likely to be busy following a massive economic stimulus package from the U.S. Congress aimed at mitigating the fallout from the coronavirus, according to a new academic study of insider trading. ...
Money Stuff: Insider Trading
Here is “Political Connections and the Informativeness of Insider Trades,” by Alan Jagolinzer, David Larcker, Gaizka Ormazabal and Daniel Taylor, forthcoming in the Journal of Finance, about the last financial crisis. The authors track trading by officers and directors of publicly traded financial institutions, and “identify political connections based on whether a board member has current or previous work experience at the Federal Reserve, Treasury Department, Congress, or a bank regulator.” ...
Senators’ Stock Sales Raise Corporate Insider Trading Concern
U.S. Senators’ selling of stock after briefings on the new coronavirus raises a similar concern for potential insider trading by corporate executives and directors. Sen. Richard Burr (R-N.C.), chairman of the Senate Intelligence Committee, and three other senators sold stock following briefings in late January about the Covid-19 virus threat, financial records show. ...
SEC Votes to Ease Audit Requirements for Smaller Companies
Hundreds of small, publicly traded companies, including biotechnology firms, will see their audit requirements eased under a rule approved by the Securities and Exchange Commission. ...
SEC Set to Ease Conflict-of-Interest Rules for Private Equity
As investments poured into private equity funds over the past two decades, an unexpected compliance problem mushroomed along with the size of the portfolios. Companies worldwide began tripping over strict U.S. auditor-independence rules that limit the types of services auditors can provide to their clients. ...
Money Stuff: Insider Trading on Securities Fraud
If you are a senior executive at a public company, and the company is doing a big securities fraud, and you own a lot of stock in the company, when should you sell that stock? Presumably the stock is overvalued, because of the fraud, so if you sell now you will get a good price for the stock. ...
2019
PwC Bolsters Audit Independence Amid SEC Investigation
PwC LLP, stung by a recent $7.9 million SEC settlement, has taken multiple steps to showcase and strengthen the independence of its auditing team from its audit clients. Among them: new compliance checks, more auditor training, policy changes, and disciplinary action for supervisors responsible for those involved with the prohibited services. ...
SEC Plan Gives Audit Relief to Firms That Wiped Out Over $290 Million
A government proposal to exempt more companies from audit requirements would give relief to 11 companies that restated financial results in 2018 and wiped out more than $290 million in market value. The Securities and Exchange Commission’s proposal, which is open for public comment until Monday, has drawn criticism from accountants and praise from businesses. ...
Executives and directors are insider trading on advance knowledge of audit issues, new study finds
Corporate executives and directors are trading on inside information about potential audit findings in the window between year-end earnings announcements and when companies file annual reports and audit opinions with the Securities and Exchange Commission, according to new research. ...