The Snare Of Section 16 Reporting Requirements

As an indirect way of sniffing out potential insider trading, the SEC has taken a new interest in reporting requirements defined by Section 16 of the Securities Exchange Act. Among those requirements, specifically in Section 16(a),  are the reporting of all insider purchases. In September, the SEC announced 16(a) enforcement actions against 34 defendants, including 13 who were or had been officers or directors of public companies. Attorneys from Sidley & Austin take a look at how the SEC is now using these requirements and what companies can do in response. Number one: Make sure all Section 16 officers and directors are properly identified. The most common error in this regard is with respect to the chief accounting officer.