Rep. Maxine Waters, D-Calif. (Photo: Bloomberg) Rep. Maxine Waters, D-Calif. (Photo: Bloomberg)

House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and ranking member Rep. Patrick McHenry, R-N.C., introduced bipartisan legislation Friday to curb insider trading.

The Promoting Transparent Standards for Corporate Insiders Act, H.R. 624, requires the Securities and Exchange Commission to amend Rule 10b5-1 to ensure corporate insiders are unable to indirectly engage in illegal insider trading through changes to their trading plans.

Waters said the bill “will play a critical role in holding corporate executives accountable and improving SEC Rule 10b5-1, which currently allows corporate insiders to avoid accusations of illegal insider trading.”

Under the bill, the SEC is to “study how to amend its rule to address reported incidents of manipulation, report to Congress, and write rules consistent with the results of the study,” Waters said.

She added that a “top priority” for regulators should be to “ensure clear guidelines and robust enforcement of illicit activities, such as insider trading, and this legislation will serve as a driving force to hold regulators and bad actors accountable.”

McHenry added that “cracking down on fraud and abuse within our financial system is apolitical. I am glad to join Chairwoman Waters in this meaningful effort to help the SEC better understand illicit insider trading.”

— Check out Maxine Waters to Keep ‘Watchful Eye’ on Regulators on ThinkAdvisor.