Insights & Publications
Diversity & Inclusion
© 2022 Debevoise & Plimpton LLP
Insider Trading Plans in Spotlight Again
3 December 2012
A recent front page article in the Wall Street Journal noted that many executives have done suspiciously well buying and selling their companies’ stocks under so-called Rule 10b5-1 trading plans. The Journal article, and the recent focus on insider trading matters generally, suggests that Rule 10b5-1 trading plans – which offer an affirmative defense to insider trading – may be ripe for increased scrutiny by regulators, prosecutors and shareholders alike.
Rule 10b5-1 prohibits insiders from possessing material non-public information when they enter into a trading plan, but the rule does not prevent insiders from cancelling an established plan at any time – including while in possession of such information. Under certain circumstances, however, the SEC may view a plan cancellation as calling into question whether the plan was entered into in good faith and not as part of a plan or scheme to evade the insider trading rules.
The Journal article may prompt regulators to take a closer look at practices relating to Rule 10b5-1 plans. With that in mind, now may be a good time to review Rule 10b5-1 plans to ensure they are designed and executed to protect against claims of impropriety.
Jonathan R. Tuttle
Matthew E. Kaplan
UK Modern Slavery Act Transparency Statement
Debevoise Login (2)
Debevoise Women's Review