(a) Prohibition of insider trading during pension fund blackout periods
(1) In general
Except to the extent otherwise provided by rule of the Commission pursuant to paragraph (3), it shall be unlawful for any director or executive officer of an issuer of any equity security (other than an exempted security), directly or indirectly, to purchase, sell, or otherwise acquire or transfer any equity security of the issuer (other than an exempted security) during any blackout period with respect to such equity security if such director or officer acquires such equity security in connection with his or her service or employment as a director or executive officer.
(A) In general
Any profit realized by a director or executive officer referred to in paragraph (1) from any purchase, sale, or other acquisition or transfer in violation of this subsection shall inure to and be recoverable by the issuer, irrespective of any intention on the part of such director or executive officer in entering into the transaction.
(B) Actions to recover profits
An action to recover profits in accordance with this subsection may be instituted at law or in equity in any court of competent jurisdiction by the issuer, or by the owner of any security of the issuer in the name and in behalf of the issuer if the issuer fails or refuses to bring such action within 60 days after the date of request, or fails diligently to prosecute the action thereafter, except that no such suit shall be brought more than 2 years after the date on which such profit was realized.
(3) Rulemaking authorized
The Commission shall, in consultation with the Secretary of Labor, issue rules to clarify the application of this subsection and to prevent evasion thereof. Such rules shall provide for the application of the requirements of paragraph (1) with respect to entities treated as a single employer with respect to an issuer under section
414(b), (c), (m), or (o) of title
26 to the extent necessary to clarify the application of such requirements and to prevent evasion thereof. Such rules may also provide for appropriate exceptions from the requirements of this subsection, including exceptions for purchases pursuant to an automatic dividend reinvestment program or purchases or sales made pursuant to an advance election.
(4) Blackout period
For purposes of this subsection, the term “blackout period”, with respect to the equity securities of any issuer—
(A)means any period of more than 3 consecutive business days during which the ability of not fewer than 50 percent of the participants or beneficiaries under all individual account plans maintained by the issuer to purchase, sell, or otherwise acquire or transfer an interest in any equity of such issuer held in such an individual account plan is temporarily suspended by the issuer or by a fiduciary of the plan; and
(B)does not include, under regulations which shall be prescribed by the Commission—
(i)a regularly scheduled period in which the participants and beneficiaries may not purchase, sell, or otherwise acquire or transfer an interest in any equity of such issuer, if such period is—
(I)incorporated into the individual account plan; and
(II)timely disclosed to employees before becoming participants under the individual account plan or as a subsequent amendment to the plan; or
(ii)any suspension described in subparagraph (A) that is imposed solely in connection with persons becoming participants or beneficiaries, or ceasing to be participants or beneficiaries, in an individual account plan by reason of a corporate merger, acquisition, divestiture, or similar transaction involving the plan or plan sponsor.
(5) Individual account plan
For purposes of this subsection, the term “individual account plan” has the meaning provided in section
1002(34) of title
29, except that such term shall not include a one-participant retirement plan (within the meaning of section
1021(i)(8)(B) of title
(6) Notice to directors, executive officers, and the Commission
In any case in which a director or executive officer is subject to the requirements of this subsection in connection with a blackout period (as defined in paragraph (4)) with respect to any equity securities, the issuer of such equity securities shall timely notify such director or officer and the Securities and Exchange Commission of such blackout period.
(b) Notice requirements to participants and beneficiaries under ERISA
(2) Issuance of initial guidance and model notice
The Secretary of Labor shall issue initial guidance and a model notice pursuant to section
1021(i)(6) of title
29 not later than January 1, 2003. Not later than 75 days after July 30, 2002, the Secretary shall promulgate interim final rules necessary to carry out the amendments made by this subsection.
(3) Plan amendments
If any amendment made by this subsection requires an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after the effective date of this section, if—
(A)during the period after such amendment made by this subsection takes effect and before such first plan year, the plan is operated in good faith compliance with the requirements of such amendment made by this subsection, and
(B)such plan amendment applies retroactively to the period after such amendment made by this subsection takes effect and before such first plan year.
(c) Effective date
The provisions of this section (including the amendments made thereby) shall take effect 180 days after July 30, 2002. Good faith compliance with the requirements of such provisions in advance of the issuance of applicable regulations thereunder shall be treated as compliance with such provisions.
For amendments made by this subsection and this section, referred to in subsecs. (b) and (c), see Codification note below.
Section is comprised of section 306 ofPub. L. 107–204. Subsec. (b)(1) ofsection
306 of Pub. L. 107–204amended section
1021 of Title
29, Labor, and another par. (3) of subsec. (b) amended section
1132 of Title
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
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