Institutional Investors Focus on Rule 10b5-1 Plans

Institutional Investors Focus on Rule 10b5-1 Plans

The media has been focusing on insider trading plans, i.e., so-called Rule 10b5-1 plans, in a number of recent articles. This has apparently grabbed the attention of institutional investors and lead the Council of Institutional Investors (CII) to submit a rule-making request to the SEC on December 28, 2012 regarding the use of such plans (available at: http://www.sec.gov/rules/petitions/2013/petn4-658.pdf).

Specifically, CII requests that:

  • Rule 10b5-1 plans only be permitted to be adopted during company-adopted trading windows;
  • The adoption of multiple, overlapping Rule 10b5-1 plans by companies and insiders be prohibited;
  • A mandatory delay of three or more months apply to the start of trading in a Rule 10b5-1 plan after its adoption; and,
  • Frequent modifications or cancellations of Rule 10b5-1 plans by companies and insiders not be allowed.
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