The U.S. Securities and Exchange Commission is proposing to exempt foreign banks from the insider lending prohibition in the Sarbanes-Oxley Act.

In a statement released Thursday, the SEC said the rule would exempt foreign banks from the insider lending prohibition that was added to the Securities Exchange Act by the Sarbanes-Oxley Act. This section prohibits both domestic and foreign issuers from making or arranging for loans to their directors and executive officers unless the loans fall within the scope of specified exemptions.

One of these exemptions permits certain insider lending by a bank or other depository institution that is insured under the Federal Deposit Insurance Act. Foreign banks whose securities are registered with the commission are not eligible for the bank exemption. The proposed rule would remedy this disparate treatment of foreign banks by exempting those foreign banks that meet specified criteria similar to those that qualify domestic banks for this statutory exemption.