US-traded Israeli cos subject to new insider deal rules

On March 18, new regulation will come into force in the US obliging directors and officers in any foreign company traded in the US with the status of a foreign private issuer (FPI) to report within 48 hours any transaction in the company’s shares or other securities. The regulation is under a law passed in December 2025, designed to tighten supervision of non-US companies that benefit from the advantages of being traded on exchanges such as Nasdaq and the New York Stock Exchange.

Late last week, the US Securities and Exchange Commission (SEC) published a list of countries companies incorporated in which will be exempt from the new requirement. They include the UK, Canada, Switzerland, the EU, Chile, and South Korea. The condition for obtaining an exemption is that the same reporting requirement already exists in the country concerned.

Israel is not on the list. This means that within a week directors and senior managers of Israeli companies traded in the US will have to start reporting changes in their holdings in the companies’ securities to the US authorities.

The requirement applies to about 100 Israeli companies traded on Wall Street. Israel is currently the second largest source of non-US companies traded on US exchanges after China.

Israeli regulations don’t satisfy the Americans

The reason that Israel has not been given an exemption is that it has no similar reporting requirement. Company officers do need to report their holdings, but that applies only to companies traded exclusively on the Tel Aviv Stock Exchange. Israeli companies traded overseas and dual-listed companies are not subject to the requirement. Moreover, company officers and directors in Israel are not required to report directly to shareholders but only to the company, which in turn reports to the stock exchange. For the Americans, this is not enough.

“The SEC’s recent move will weigh on Israeli companies, which will now have to implement policies and procedures that will ensure accurate reporting within a short time, and closer coordination between the company, directors and officers, and brokers,” says Adv. Dr. Shachar Hadar, a partner at law firm Meitar who advises Israeli companies traded on Wall Street.

Hadar says that the new regulation will give the public additional information and at higher frequency on holdings and transactions of directors and company officers, “but Israeli companies already report annually on senior managers’ compensation, and information on share sales is already submitted under SEC rules.”

Contrary to SEC’s declaration

The SEC’s decision not to exempt Israel from the new regulation is thus explicable by the differences in reporting requirements between the two countries, but it is nevertheless surprising given the declared intention of the US regulator of making life easier for Israel companies. In January, during a visit to Israel, SEC chairman Paul Atkins said that the SEC was considering exempting Israel from a planned tightening of regulation of FPIs unconnected to the current question of reporting of holdings by directors and officers.

The intention of introducing generally closer regulation of FPIs was reported last year. Under it, an FPI will have to prove that a minimum proportion of its shares is traded outside the US, that it is listed for trading on a non-US stock exchange, and that it is subject to satisfactory requirements concerning reporting and corporate governance in its country of origin. This is against the background of the fact that some overseas companies traded in the US are incorporated in countries known for very lax regulation, such as the British Virgin Islands and the Cayman Islands.

As mentioned, Atkins came to Israel with a reassuring message for Israeli companies and signaled that the new regulations would not apply to them. The Israeli companies traded in the US breathed a sigh of relief, as FPI status gives them considerable advantages in the US, including an exemption from quarterly reporting, relaxations on immediate reporting requirements, and the ability to report in accordance with Israeli accounting standards. The reassurance came after the Israel Securities Authority (ISA), headed by Adv. Seffy (Yosef) Zinger, managed to persuade its US counterpart that local regulation provided an adequate response to its requirements.

Atkins made clear that the SEC’s fears were focused on Chinese companies incorporated in the Caribbean islands that were taking advantage of FPI status to benefit from relaxations in the US. In fact, the move to tighten regulation of FPIs was from the outset perceived as part of the trade war instigated by US President Donald Trump against China.

Following Atkins’s visit to Israel, the ISA started to work with the SEC to enable public companies traded in Tel Aviv to benefit from relaxations in listing their shares for trading in the US, and later on perhaps in IPOs there, along the lines of the relaxations available to companies incorporated in Canada.

Public supervision

In Israel, the obligation to report holdings of directors and company officers is intended first and foremost to ensure transparency. “When a CEO, director, or other senior office holder buys or sells shares in a company, this can be perceived by the market as a sign of the company’s situation or of the expectations of its management,” explains Adv. Hagit Ross, a partner in the Capital Markets Department of law firm Barnea Jaffe Lande & Co.

A further aim is to deter the misuse of inside information. “Company officers are often exposed to material information that has not yet been reported to the public. The reporting requirement creates a public and regulatory supervisory mechanism that makes it hard for them to exploit inside information for personal gain, since every transaction by them in the company’s shares is documented and reported,” says Ross. The reporting requirement is meant to strengthen the public’s confidence in the capital market and to assure investors that transactions are not taking place behind the scenes unknown to them.

Hadar believes that alongside the existing SEC rules applying to Israeli companies, there are other ways of supervising them without increasing the reporting burden. “Reports of transactions are an important tool for enforcement agencies in monitoring trading patterns and identifying unusual deals, but compliance and control mechanisms are already in place, and stricter checks are carried out in the case of material events, in order to enforce the prohibition on the use of inside information,” he says.

There are those on the capital market who think that the war in Iran will make the SEC consider at least a postponement of the application of the new rules to Israeli companies, but it is not clear at the moment whether this will happen, and meanwhile senior people in Israeli companies traded in the US are starting to prepare to meet the stricter requirements imposed on them.

Published by Globes, Israel business news – en.globes.co.il – on March 12, 2026.

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