Don’t Hold Me Back: New SEC Rules on Executive Trading Plans Soon Take Effect

Insider trading is generally prohibited—and can have serious consequences. But Rule 10b5-1 of the Securities Exchange Act of 1934 includes an affirmative defense that allows companies and their insiders to buy and sell stock if they adopt good-faith trading plans before becoming aware of material nonpublic information. New SEC rules soon apply a cooling-off period to corporate officers and directors entering into Rule 10b5-1 trading arrangements. The cooling period may be as long as 120 days before they can commence trading. And others can be subject to a 30-day cooling-off period for trading arrangements. See 87 Fed. Reg. 80,362 (Dec. 29, 2022).

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• New SEC Rules Put Spotlight on Exec Trading Plans 
  See how new SEC rules impose a cooling-off period before insiders can trade on their employer’s securities, that period being up to four times as long as many companies previously imposed. Insider trading laws generally prohibit those who receive or become aware of material nonpublic information about a public company from trading in the company's securities or providing material nonpublic information to others who may trade in such. These plans make compliance a bit more tedious.
• Rule 10b5-1 Plans
  Learn how a Rule 10b5-1 plan's terms satisfy certain conditions regarding insider trading. Now when trading follows the terms of the plan, the company insiders who adopted the plan can qualify for an affirmative defense to potential insider trading claims for otherwise prohibited trades.

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