(Reuters) – U.S. authorities are investigating whether executives have been gaming prearranged stock-sale programs designed to thwart the possibility of insider trading, Bloomberg News reported on Thursday citing people familiar with the matter.
The U.S. Securities and Exchange Commission and the Justice Department are concerned some people may be manipulating stock-sale programs, which are intended to shield executives from misconduct allegations by scheduling the transactions in advance, the report added.
An SEC spokesperson said the agency does not comment on the existence or nonexistence of a potential investigation. The Justice Department did not immediately respond to Reuters’ requests for comment.
Prearranged stock selling programs have come under criticism in response to a growing body of academic research detailing some executives’ well-timed trading around material events. Democratic Senator Elizabeth Warren and other lawmakers have pushed the SEC to toughen its rules to prevent executives from using the plans to trade on inside information.
The probes by the SEC and the Justice Department would indicate a ratcheting-up of scrutiny of such programs, which are common throughout U.S. corporations.
(Reporting by Manya Saini in Bengaluru and Chris Prentice in Washington; Editing by Krishna Chandra Eluri and Jonathan Oatis)