Satyam - Board of directors quorum

A piece in the Times of India quotes an anonymous source in the Ministry of Corporate Affairs commenting on Clause 49 of the Listing Agreement - saying the Board meeting of Satyam will not be able to take place in the absence of a majority of directors being independent. Various other papers have started writing opinion pieces based on this assumption. This is, of course, bunkum.

If this was true, most of the public sector listed companies would be virtually shut down as they have not complied with the requirement for the last three years and they wouldn't be able to operate. More technically, SEBI has explicitly provided for a 180 day period within which the vacancy needs to be filled. Here is the SEBI circular. Companies Act does not provide for any quorum of independent directors for Board of Directors' meetings, and the listing agreement which does, gives a long rope.

Exit opportunities for regional exchanges

Finally, SEBI has given regional stock exchanges (RSEs) who don't have a business model to de-recognise themselves as exchanges. The exchange would continue as companies and can be engaged in any business they like. The circular is nearly comprehensive and handles all the important issues and does an excellent job in terms of covering some of the grey areas in an equitable manner and also a practical manner.

The most important part of this circular is the opening line which says "As per the said guidelines, such RSEs (or their successor entities) may be permitted to retain movable and immovable assets and to deal with such assets as they deem fit subject to compliance with the following conditions:" It then sets aside certain sums on an equitable basis like the Investor Protection Fund. Most importantly, it permits the exchange to continue to act as brokers of NSE and BSE and gives certain regulatory comfort that the brokerages (which are in fact doing very well) can continue even after the exchanges are derecognised as exchanges. Companies exclusively listed on such exchange must either move to another exchange or take steps to delist.

The most contentious part of the condition is the distribution of assets of the exchange. Many exchanges wanted special dispensations like income tax exemption, stamp duty exemption on voluntary withdrawal of recognition and subsequent distribution of assets to its members. On the other hand, many in policy making thought of derecognition in the other extreme - of extracting a special tax since many exchanges have enjoyed tax breaks and some have enjoyed purchase of concessional lease/land rights. The current circular is a good middle path, neither giving a special dispensation, nor making it monetarily unattractive to derecognise as an exchange. I have always thought, that giving up some of the rights of the government would enable some of the RSEs to derecognise themselves, because many are providing a massive regulatory burden without any benefits to anyone. I am glad a good path has been found and hope many of the RSEs will now take this opportunity to derecognise.

To see the history and issues of regional stock exchanges see my previous posting here.

Satyam - resignation and poor advice

I thought the resignation of Mrs. Mangalam Srinivasan (or at least the one reported in the news) was very mature. It demonstrated contrition, it was humble and it talked the walk by resigning. She stated she had concerns at the meeting but admitted she was to blame for them not being recorded as dissent. At last, someone deserving of at least some degree of respect out of the Board.

There is an opinion piece by Mr. Omkar Goswami on the Satyam deal and one part of his piece simply shocked me because he is advocating an illegal act by way of suggesting what Satyam ought to have done. Here is what he said:

“It was a massive related-party transaction. Irrespective of law, good corporate governance demanded that such a proposal be rejected by the board or, at best, be first sounded out to the FIIs and FIs, who together owned almost 61 per cent of the stock. It wasn’t. The denouement: Embarrassment, poor denials and tragic-comic about-turns.”

Sounds innocuous? Well, it’s illegal both under Indian laws and US laws to disclose information selectively to “FIIs and FIs”. In other words, if disclosure is made by insiders, it must be made to everyone at the same time or to no one. This kind of selective disclosure directly violates insider trading regulations of India and Regulation FD (or Fair Disclosure) of the US SEC. This is one advice Satyam can do without.

See the full post on my main blog.

Just when you thought, things couldn't get worse for Satyam Computers, they do.

The Upaid lawsuit in Texas, US, seeking over a billion dollars in compensation and also punitive damages (BTW, Texas is famous for giving fantastical awards in punitive damages), gets an updated application to restrain Satyam from frittering away its assets. I have blogged about it two days back. What I further discovered was that this Upaid story, even though it started in 2007 is not reported to the Indian exchanges or to the SEC. This is a serious non disclosure of material facts even though the fact is only of a contingent liability. Further developments including losing a case in London in an offshoot case is also not reported. This violates both SEC regulations and Indian listing agreement on disclosure obligations.

Financial Express reported possible insider trading based on the pattern on only-sell trades in Satyam over the past few months. Though the numbers sold are not very alarming I think it does make out a probably cause for suspicion and a serious investigation.

Yesterday, several papers reported that the World Bank had some three months back blacklisted Satyam from working with the Bank for a period of 8 years. It was barred by bribing Bank staff, oh sorry, what I meant was providing "improper benefits to bank staff". The Bank is apparently the 4th largest client of Satyam. If this is not material information to be reported to the Indian exchanges and SEC, what is? In an incredible statement, the company said it does not report on individual clients. Whoa so, why did it announce getting the contract in 2003, and we don't want to know about individual clients only your deeds. Also, this reflects very poorly on the transparency of the Bank which has been lecturing nations about the benefits of transparency and governance. Also as late at Oct 2008, Satyam has denied being blacklisted by the Bank, this is of course an actionable mis-statement.

Yesterday's Mint headlines has an interview based piece of T R Prasad an independent director of the Board. He says the related party inflated purchase of shares (blogged extensively in the past few day) was only cleared in principle 'but at what price, when and how was not decided'. Apparently, he also said a day before that, that the deal was not cleared by the Board. All of this is of course wholly inconsistent with what has been stated by the company and also by the Chair of that fateful Board meeting M Rammohan Rao. The official press release of 16th Dec clearly says the acquisition of Maytas Properties shall be immediate, and of Maytas Infra would be 31% plus open offer. So if things weren't bad enough for the independent directors, one independent director wishes to distance himself from the official press release of the company of the 16th after almost a week on the 22nd Dec. Faster thinking next time.

The claim that the valuation of the two companies was done by a 'big four' accounting firm, is also hotly denied by all four firms.

This is tranforming itself from an abject failure of corporate governance of independent directors into a serial mis-statements and suppressions by the company, independant directors, promoters and senior management.

PS: Many companies have rogue employees and face some liability on account of their individual mis-deeds for no fault of the company as a whole. In such cases, if proper reporting is not done as is required by disclosure regulations, it is not only violation of technical disclosure requirements, but also creates the suspicion that the senior managment was aware of or active in the misdeed(s). Contrast this episode with the Infosys facing a sexual harassment lawsuit because of the action of one of its officers.

Forged SEBI letter, novel fraud

This must set a new record for innovation in securities fraud. See the SEBI press release which is self explanatory:

"PR No.327/2008

Clarification on news reports relating to Pyramid Saimira Theatre Ltd.

It has been widely reported in the media that SEBI has vide order dated December 19, 2008, directed Mr. P S Saminathan, the CMD of Pyramid Saimira Theatre Ltd. (PSTL), to make an open offer for acquisition of shares of the Target Company (PSTL) at a price of not less than Rs. 250/-. A copy of the letter purported to have been issued by SEBI was also flashed on some TV Channels today.

It is hereby clarified that no order or letter has been issued by SEBI to Mr. P S Saminathan on 19.12.2008. It appears that the said letter is being circulated with ulterior motives.

SEBI is separately investigating into the matter including the origin of the letter. SEBI is also separately inquiring into the dealing in the scrip following the press report including alleged violation of SEBI (SAST) Regulations, 1997.

Mumbai

December 23, 2008"

Though I don't have an accurate set of facts, it appears the news of the letter being sent predates the actual receipt of the forged letter by the company. The company denied having received such letter, and then voila it reached their doorstep and as is required, the development was duly reported by the company to the stock exchange.

If this was merely to hurt the company, I'm not sure it caused more than a lot of nuisance for a few days at most.

If this was meant to manipulate the market to profit from it, this is not a very good idea unless the fraudster is a very very sophisticated manipulator and is able to hide his/her large order in the crowd of orders by breaking it up. The surveillance system of SEBI would pick up any substantial purchase on fall or sale on rise of the stock complete with PAN number.

More on the quality of the forgery after I get a closer look at the piece. It looked pretty authentic on TV, and it seemingly bore the file path of a letter sent by SEBI HQs to SEBI Calcutta office on the 1st November.

Regulatory appointments in the US and India

While the former head of NASDAQ stock exchange Madoff is in jail for carrying out the biggest financial fraud in modern history, the former head of NASD Mary Schapiro, its regulatory arm (and now Finra) is set to become the head of the US Securities and Exchange Commission (SEC). With an outstanding record in law and finance and having spent a successful career as a regulator, ironically, her only chink in the armour is that her regulatory organisation was unable to catch Madoff while he made hay.

In sharp contrast, the head of India's anti-trust regulatory agency - the Competition Commission of India (CCI) is to be populated with a retired babu (an Indian bureaucrat is pejoratively called a babu), rather than an expert, according to a news report today. The name was not out yet.

See my main blog here.

Satyam Board - thy name is mud

Seems we were all barking up the wrong tree - rather the wrong shrub. There is something far more sinister which has occurred in the self dealing proposal. This is based on a CNBC report I saw yesterday which does not seem to have seeped in at all in the rest of the media - even much of CNBC analysis.

First, of the so called 6800 acres of 'land bank' (land under development) by Maytas Properties and thus valued at $ 1.3 billion, only 100 acres could be verified. Most of this 100 acres too is in sub-prime areas like agricultural land. When the correspondent contacted the company for the figures, the company said it does not comment on such figures as its a closely held company (BTW, it is a listed company). This needs to be investigated.

Second, the promoters of Maytas Infrastructure own not 35% of the company but closer to 85% of the company. The following is from CNBC:

"Coming to Maytas Infra, the promoters have clarified yesterday in a conference call that the promoter holding is around 36.6%. But when one digs into the DRHP of the company, many questionable names appeared in the public shareholding list.

Shareholding Picture %
Elem Investment 8.92%
Fincity Investment 8.92%
High Grace Investment 8.92%
B Jhansi Rani 2.35%
B Suryanarayana Raju 4.3%
Radha Raju Byrraju 4.38%
B Rama Raju 8.74%

These shareholders hold more than 40% in the company. All the above investors, whose names are in public shareholding, have been issued equity shares
pre-IPO at a price lower than the issue price. According to sources, actual promoter shareholding along with relatives and friends could be as high as 85%."

I think this is quite damning - if the names of the shareholders are in the public shareholding list and they are in fact publicly held rather than by promoters, why would such people be given discounted shares before the IPO. Clearly, this bit is easily proven with some minimal investigation. If the public part of the shareholding is mis-represented in Maytas Infra, the chance of it being misrepresented in Maytas Properties is not a remote possibility. Over to SEBI and Ministry of Corporate Affairs for investigating this which goes well beyond corporate governance into the domain of fraud and who all were complicit in this naked abuse and who kept their eyes closed long enough for all this to happen.

I think, it is also time that the various shareholders got together and called a general body meeting (requires 10% shares to call one) and remove all the directors from the slate of the company under S. 284 of the Companies Act 1956 - a relatively easy job given that the promoters are minority 8.6% shareholders in Satyam (or so is the claim).

Satyam - name and reputation are upside down - 2

Compensation of independent directors
In case you are curious, here is the list of the independent directors of Satyam and what they were paid last year for attending 3 to 4 Board meetings:

Prof. Krishna G Palepu (non-independent but non-executive member) (Harvard Business School)
Compensation: 91,91,000 + 5,000 shares sold at nominal value of Rs. 2 each.


Mr. Vinod K Dham (innovator)
Compensation: 12,40,000 + 5,000 shares sold at nominal value of Rs. 2 each.

Prof. M Rammohan Rao (Dean, Indian School of Business)
Compensation: 13,20,000 + 10,000 shares sold at nominal value of Rs. 2 each.

Mr. V P Rama Rao
Compensation: 1,00,000 + 10,000 shares sold at nominal value of Rs. 2 each.

Dr. (Mrs.) Mangalam Srinivasan
Compensation: 12,80,000 + 5,000 shares sold at nominal value of Rs. 2 each.

Mr. T R Prasad
Compensation: Rs. 12,53,333 + 10,000 shares sold at nominal value of Rs. 2 each.

Prof. V S Raju
Compensation: Rs. 12,53,333 + 10,000 shares sold at nominal value of Rs. 2 each.
(shares valued at its peak at Rs.600 per share and now in the region of Rs. 225 before yesterday's announcement)

Clearly, the independent directors were fed well. Though I have nothing against proper compensation, when independent directors are paid ‘too much’, they would I assume lose any motivation to keep their eyes open at Board meetings and create the right diversity needed to voice their independence.

Audit committee’s role
What about the audit committee, would they have a mandate to vet the process?

The functions of Audit committee include:

1. Oversight of the company’s financial reporting process and disclosure of financial information to ensure that the financial statements are correct, sufficient and credible.

…

5. Reviewing with the management, performance of statutory and internal auditors, and adequacy of the internal control systems.

Composition of the audit committee
1) Prof. M Rammohan Rao, Chairman
2) Dr. (Mrs.) Mangalam Srinivasan
3) Mr. T R Prasad
4) Prof. V S Raju

Clearly, with spending of the entire cash reserves on a related party transaction by the company - both internal audit and internal control issues would need to be studied. I would be very surprised if the internal audit committee even looked at the transaction. So little information is made available in the public domain, that it is difficult to judge what actually occurred behind closed doors.

Absention in meeting and vote by interested directors
Interestingly the press release about the acquisition does not mention any abstention by the interested directors in the vote on the issue. This is not only in direct conflict with the code of conduct for directors (quoted below) but would also violate the provisions of S.300 of the Companies Act 1956 which prohibits an interested director from participating or voting on an issue where they are interested. My guess is the Board would not have violated the statutory provisions and code of conduct and may have asked the interested directors to walk away ‘please’ so that they could vote 'independently'. However, there is no indication of any factual abstention and if there was a genuine arms length related party transaction with the interested directors abstaining, rather than a lip service exit from the room for two minutes, the official press release/stock exchange disclosure would not be quoting the executive Chairman, (instead of a representative of the independent director) of the company saying:

"The two acquisitions pave the way for accelerated growth in additional geographies and market segments such as ..." said Satyam Chairman and Founder B. Ramalinga Raju.

Incredibly the company release gives the name and designation of Ramalinga Raju in bold.

Satyam Computer Services Limited - Code of Conduct and Ethics for Directors and Associates
The Code of Conduct duties imposed by the Board of directors on themselves is given in this document:
II) Legal, Honest and Ethical Conduct

The directors and associates are required to conduct their duties legally, honestly and ethically, when acting on behalf of the Company or in connection with the Company’s business or operations.

They shall

· Act in the best interests of, and fulfill their fiduciary duties to the stakeholders of the Company;

· Act honestly, fairly, ethically, with integrity and loyalty;

· Conduct themselves in a professional, courteous and respectful manner;

· Act in good faith, with responsibility, due care, competence, diligence and independence;

IV) Conflict of Interest
The policies and procedures under this code requires that the directors and associates of the Company shall avoid any activity or association that creates or appears to create a conflict between the personal interests of the directors and associates and the Company’s business interests.

…

a) Other employment/assignments: The executive directors and associates of the Company shall devote themselves exclusively to the business of the organization and shall not accept any other work or assignment for remuneration (part-time or otherwise).

The directors and associates are expected to avoid even the appearance of a conflict of interest even if the activity is non-remunerative.

b) Disclosure of interest by director: The directors shall disclose conflicts of interest that directors may have regarding any matters that are placed before the Board, and abstain from discussion and voting on any matter in which the director has or may have a conflict of interest and shall make available to and share with other directors information as may be appropriate to ensure proper conduct and sound operations of the Company.
…
d) Related parties: The policies and procedures of the Company expect that the directors and associates avoid conduct of business of the Company with their relatives or their significantly associated Companies, firms and other businesses. In case of conflicts, disclosure shall be made to the Board of Directors and its approval shall be obtained before proceeding further.
…
h) Others: The conflicts of interest that may arise in any other form which at this point of time, may not be practicable to enumerate. In case, any act, transaction or situation raises doubts or questions, the directors or associates must consult the Company’s Head – HR or Compliance Officer.

Conclusion
I think this is a clear case of violation of fiduciary duties by the executive and independent directors of the company and I would go so far as to state that they have violated all three duties imposed upon them as fiduciaries – the duty of care, the duty of diligence and the duty of loyalty.

Please see my main blog for the full post.

Satyam - name and reputation are upside down

The story till now in brief:
Satyam, one of the leading software and BPO companies of India declared yesterday (16th Dec) after market close that it was planning to buy large stakes (100% and 51%) in two promoter companies. Maytas and Maytas Infrastructure (the word Maytas is Satyam written backwards) are promoted by the family of the executive Chairman of Satyam Ramalinga Raju. In a remarkably noisy protest against the move by investors,
including the usually sleepy mutual funds, perhaps for the first time in the history of corporate India a reversal of the perverted decision occurred in around 12 hours - today morning (17 Dec). Helpful in injecting some sense was the hand played by a 56% reduction in the value of the depository stock in the US markets.

While the combined valuation of $ 1.6 billion for property and infrastructure companies sounds high, given the steep expected fall in real estate prices over the next few months, the so called synergies between the three firms took the cake in terms of comic fiction.

“Mr Raju said the two companies would be helped by Satyam’s ‘soft’ skills in infrastructure vertical.”

Synergy between software and real estate development? Whoa, and saying that with a straight face on TV was truly an achievement of sorts for Ramalinga Raju.

My second favourite cynical quote of Raju is: “With regard to Maytas Infra, he said the valuation was based on SEBI guidelines.” Whoa, so now it’s SEBI’s fault that you grossly overvalued your sons’ companies? Raju bhai, SEBI prescribes minimum standards of governance and valuation disclosures not valuation levels and their fairness – and most of them are geared towards honest arms length transactions.

The Chairman said there was no need to go to the shareholders for the transaction under present Indian laws. Sure, but there is nothing in the law which prohibits you from going to the shareholders, particularly when the deal is so incestuous and the Board, a majority of which is interested, decides the outcome of the deal.

Here is another jewel “Our advisor was one of the Big Four consulting firms. We have signed a confidentiality agreement with them, and I therefore cannot disclose the name.” The confidence belongs to Satyam, so it would be legitimate for the accounting firm to cite confidentiality – it is bizarre for the company to cite confidentiality.

What is most disturbing about this is a statement made by Raju yesterday on TV, saying the decision by the Board was 'unanimous'. So I thought, I'll go hunting for the exchange disclosure about the decision. Also I would need to go look for the august list of 'independent' directors.

continued

SEBI documents now made public

Those of you who missed it (I did too till someone emailed me the update), SEBI today put out its Board agenda papers (for the December meeting) on its website. Here is the link:

http://www.sebi.gov.in/boardmeetings/120bmho.html

If you missed my previous blog post of 4th December, this was in all likelihood a reaction to my Right to Information (RTI) application which I made on the 2nd December seeking previous Board meeting agenda papers and minutes. On the 4th December Board meeting, less than 48 hours from my application, the Board decided to share its agenda papers voluntarily. Actually, now I'm certain it was based on my application, because if you note from the agenda papers this new found disclosure was not an item on the agenda!

You are welcome :)

The financial crisis for infants

Here's a funny piece on how to teach small kids about the financial crisis by Tim Harford of the 'Undercover Economist' fame.

Dear Economist,
My young son came home from school and asked me: “Mummy, what’s a credit crunch?” How can I explain this to a five-year-old?
Ms LG, London

Dear Ms LG,

Once upon a time, there was a blameless girl called Consumerella, who didn’t have enough money to buy all the lovely things she wanted. She went to her Fairy Godmother, who called a man called Rumpelstiltskin who lived on Wall Street and claimed to be able to spin straw into gold. Rumpelstiltskin sent the Fairy Godmother the recipe for this magic spell. It was written in tiny, tiny writing, so she did not read it but hoped the Sorcerers’ Exchange Commission had checked it.

The Fairy Godmother carried away armfuls of glistening straw-derivative at a bargain price. Emboldened by the deal, she lent Consumerella – who had a big party to go to – 125 per cent of the money she needed. Consumerella bought a bling-bedizened gown, a palace and a Mercedes – and spent the rest on champagne. The first payment was due at midnight.

At midnight, Consumerella missed the first payment on her loan. (The result of overindulgence, although some blamed the pronouncements of the Toastmaster, a man called Peston.) Consumerella’s credit rating turned into a pumpkin and Rumpelstiltskin’s spell was broken. He and the Fairy Godmother discovered that their vaults were not full of gold, but ordinary straw.

All seemed lost until Santa Claus and his helpers, men with implausible fairy-tale names such as Darling and Bernanke, began handing out presents. It was only in January that Consumerella’s credit card statement arrived and she discovered that Santa Claus had paid for the gifts by taking out a loan in her name. They all lived miserably ever after. The End.

Read the original piece here.

Insider trading laws should not become a booby trap

I have written a piece in today's Economic Times on the new insider trading regulations. It hasn't appeared in all editions (at least in the Ahd edition), so here it is in full:

Insider trading laws should not become a booby trap
8 Dec 2008
The recent amendments to insider trading laws—brought about by SEBI—turn the law on its head.
The two key amendments are an expansion of the definition of insider trading, to convert insider trading to outsider trading. The other amendment creates a bar for insiders from trading in their companies’ shares for six months after the first leg of the buy/sell trade. Both are extreme measures, nearly unrivalled in their scope anywhere in the world.

The first is the modification of the essence of insider trading. Insider trading as existed last month penalised the misuse of non-public price-sensitive information by fiduciaries of the company, who have access to such information, and, in breach of their trust owed to the company, use it for private gain— of course at the cost of other shareholders. Fancy economists call this ‘exploitation of information asymmetry’. This breach continues if the insider gives the inside information to friends or relatives in what is known popularly as tipping of information to ‘tippees’.

The amendment extends the insider trading regulations, with a shift of some commas and clause repositioning, to include ‘any person who has received or has had access to such unpublished price-sensitive information’. Previously, this class of persons was only limited to those connected with the company.

So, now anyone who chances across price-sensitive information can be liable for insider trading. Thus a person who recycles paper from the trash of a listed company, or a journalist who actively attempts to uncover fraud, also becomes an insider as opposed to only officer/directors/fiduciaries and their tippees as previously existed.

If you think these cases are hypothetical and very unlikely to be prosecuted by SEBI, just look at the shameful example of Dirks in the US. Dirks, an analyst and an (temporary) investigative journalist who actively uncovered a massive fraud in a company and communicated this fact to his clients, was hauled up by the SEC for insider trading. The US Supreme Court had to finally rescue Dirks in a landmark case of Dirks vs SEC.

Even on first principles, to equate an outside-person—who chances upon inside information—with an insider (or tippee) is wrong. It is analogous to equating a bank robber with a person who chances across a hundred-rupee note on the street. While picking up that note may be unfair and morally wrong, it is certainly not deserving of the same penalty as that given to a bank robber. It is also wrong because it causes honest people to be caught in the web of the regulations even though they are acting in the interest of society in uncovering fraud.

To be sure, some odd jurisdictions have this kind of liability imposed on outsiders, commonly called the ‘possession theory’ of insider trading, though for the reasons cited, I find the regulation wholly unacceptable.

All aside, this amendment was brought without consulting the public and experts through a paper exposed for comments. I recall, as head of the legal affairs department of SEBI, I took relatively minor amendments, ironically to the insider trading regulations, to the Board, and was told in no uncertain terms that they would like the changes first to be exposed to public comments howsoever minor they may be. In any case, I guess, this is a law which we’ll have to now live with.

(The author is a faculty at IIM, Ahmedabad and was an ED at SEBI previously)

Link to article.

Go to my main blog.

SEBI

Insider trading becomes outsider trading

The Securities and Exchange Board of India (SEBI) has recently amended the insider trading regulations. The two key amendments are:

1. Broadening of the definition of the term 'insider' to include anyone who has 'received' inside information.

2. Prohibition of trades by a designated insider within a 'swing period' of 6 months. In other words, corporate directors and officers cannot sell shares for a period of 6 months after buying. There is also an absolute prohibition on such persons from entering trades in the derivatives segment in the company's shares.

Both provisions are overly broad. I will write a detailed post on the first point later as the change marks a shift in the entire philosophy of insider trading in India and converts insider trading into insider and outsider trading.

The second amendment is an extreme version of the 'short swing profit' rule which I had advocated. The short swing profit rule, in existence in the US markets makes designated insiders like directors and senior officers hand over any profit they make to the company if the buy/sell occurs within a six month period. This and several other amendments to the regulations were proposed by me based on my IIM, A working paper written in 2003 available here. It imposes a strict liability on insiders without any need for proof of guilt. Conversely, the payment does not imply a guilt as the rule is a strict liability clause and only requires a designated insider to hand over profits to the company whether he/she was in fact in possession of price sensitive information or not. Based on the working paper, SEBI had put out a draft for public comments for short swing profits and other amendments.

The amendment carried out takes this principle to absurdity (and a wholesale departure from the papers for public comments) and wholly prohibits all trades by insiders for six months after purchase. I'm fairly sure no other jurisdiction goes to such extreme lengths to wholly outlaw officers from trading in such a large window. Clearly, this is a poorly thought out regulation, hazy in philosophy and extreme in execution.