By Katanga Johnson

WASHINGTON (Reuters] – Wednesday’s U.S. Securities and Exchange Commission proposal tightened a legal safe harbor that permits corporate insiders trade in shares. The SEC also proposed other rules to enhance the resilience of money markets funds.

Additionally, the agency revealed measures to improve transparency regarding share buybacks as well as complex derivatives that were at the heart of the collapse in Archegos Capital Management (New York) earlier this year.

Gary Gensler, SEC Chair, has achieved a significant milestone by introducing long-awaited reforms. He laid out an ambitious plan to combat corporate wrongdoing and improve corporate governance as well as address market inequalities.

Public consultation is required for these changes to affect a broad range of corporate America. They will be affecting publicly traded companies as well their top executives. Bank groups and asset manager such as BlackRock (NYSE ), Vanguard and Fidelity (NYSE ).

Progressives pushed for tightening “10b5-1” corporate trade plans. They have been critical of the rules since they allowed insiders to manipulate the system and make huge gains at the expense ordinary investors.

Insiders can trade stock in companies’ stocks at predetermined dates. The plan provides legal protection against any allegations of insider dealing. It is too simple to amend, cancel or modify trades without much scrutiny.

Wednesday’s proposal calls for executives to make public those plans as well as any modifications. Executives are also required to disclose their plans and any modifications. The SEC requires that there be a cooling-off period of 120 days from the date of an executive’s adoption. Companies trading their own securities will have a cooling-off period of 30 days.

Gensler stated that the proposal would prohibit insiders having multiple overlapping plans. Gensler suggested this could enable them to pick favorable plans whenever they wish.

Although critics claim the plans are flawed for many years, executives have been able to trade them. Pfizer (NYSE: Moderna (NASDAQ:) During the COVID-19 vaccination development process, renewed scrutiny of these plans was raised and highlights transparency issues. Daniel Taylor is a University of Pennsylvania professor who specializes in financial disclosures.

Taylor explained that “there is mounting evidence” that the plans are being used in an illegitimate manner and used to enrich corporate insiders.

In contrast to its current quarterly disclosure rules, the SEC stated that it would like companies to report share buybacks within one day of execution.

The changes were welcomed by investors groups.

“Cleaning up practices that can be a pathway for abusive trades will help restore trust in our markets,” said Amy Borrus, head of the Council for Institutional Investors.

SEC made changes to the U.S. $5 trillion money market funds sector. This was also bailed out twice during 2020’s pandemic-induced turmoil.

Critics argue that there is an implicit guarantee from the government to this sector.

The SEC presented new liquidity requirements. They also proposed scrapping restrictions and redemption fees. Additionally, they suggested that funds value be adjusted in accordance with deal activity. This is known as swing pricing.

Although the industry acknowledges that changes are needed, some corporate groups might object to certain trading disclosures.

Howard Berkenblit of law firm Sullivan and Worcester said that some aspects seem excessive. A long cooling off period, as well as limits on how many plans are available will make these plans less popular. This could lead to a drop in their use.

SEC also presented a plan for preventing misconduct through security-based Swaps.

This was the heart of the Archegos crash, in which Wall Street bank trades suffered $10 billion losses.

Investors will be required to make such trades public under the new rules.