SEC Law

How To Use Rule 10b5-1 Trading Plans To Sell Company Stock (Part 1)

Darryl Rains and Sunil Kulkarni
Insider trading restrictions can cause constant headaches for executives and their companies. Rule 10b5-1 trading plans are an ideal solution when they are properly drafted and implemented.

How To Use Rule 10b5-1 Trading Plans To Sell Company Stock (Part 2)

Darryl Rains and Sunil Kulkarni
Insider trading restrictions can cause headaches for executives and companies. Rule 10b5-1 trading plans are an ideal solution. Part 2 explores their restrictions and flexibility, and how to disclose them.

Prevent A Martha Stewart Moment:
Insider Trading In Your Company's Stock

Bruce Brumberg
Whether you think that Martha Stewart was guilty or innocent, or that the government should not have brought criminal charges against her, she made a number of rash mistakes that we all can learn from to avoid civil or even criminal charges of insider trading.

How Executives And Directors Can Avoid SEC Troubles Before Trading Their Company Stock
(Part 1)

Merrill Freed and Steven Schraibman
Your advisors say now is the time to buy or sell your company stock or to exercise options. But before you proceed, you'd better understand the securities laws that apply. Otherwise, you risk losing your profits, paying big fines, attracting unwanted media attention, and perhaps even going to jail. The storm of controversy over the backdating of stock option grants shows how closely executive stock sales are scrutinized.

How Executives And Directors Can Avoid SEC Troubles Before Trading Their Company Stock (Part 2)

Merrill Freed and Steven Schraibman
Your advisors say now is the time to buy or sell your company stock or to exercise options. But before you proceed, you'd better understand the securities laws that apply. Part 1 focused on insider trading and Rule 10b5-1 plans. This article looks at other pitfalls of securities law, including short-swing-profits violations under Section 16(b), and required SEC filings, such as Form 4 and Form 144.

Insider Trading Prevention & Education

Bruce Brumberg
myStockOptions.com
Editor-in-Chief Bruce Brumberg developed this PowerPoint presentation for talks and meetings on insider trading. With colorful examples from recent cases, it covers fundamentals, penalties, Rule 10b5-1 preapproved trading plans, and lessons that the cases of Martha Stewart/ImClone and Joseph Nacchio/Qwest can teach. (Premium members can view the presentation in PDF from the above link and may request permission to use it at their companies. Please allow up to a minute for the presentation to ful

Elevated Enforcement

Julius Melnitzer
Inside Counsel
The SEC's intensified search for insider trading includes enhanced scrutiny of Rule 10b5-1 trading plans.

Insider Trading Makes Comeback In Options 20 Years After Boesky

Bob Drummond
Bloomberg.com
A large volume of corporate acquisitions and well-timed investments in target companies has set off alarms about insider trading at the SEC and in stock exchanges around the world.

The SEC Is Eyeing Insider Stock Sales

Jane Sasseen
BusinessWeek
Concerned about patterns of trades before bad news and abuses that signal insider trading, the SEC is looking into Rule 10b5-1 plans.

Rule Change Will Make It Easier For Insiders To Make Legal Trades: New SEC Regulation [On Insider Trading] Is Little Known But Could Have Big Impact

Kathleen Pender
San Francisco Chronicle
The SEC has established an "affirmative defense" against charges of illegal insider trading if a person specifically agreed to a trade in a written contract before learning important inside information. This could be a godsend for executives who own a lot of company stock and want to diversify their holdings but have trouble in finding a window of opportunity to sell.

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UPDATED! What is insider trading? Do you have to be an "insider" or executive to commit it?

Insider trading, which is illegal, occurs when someone possesses inside information about an important but secret development at a company and then trades that company's securities to gain an advantage from the movement of the stock price that will occur when the information is made public...

What is insider tipping?

Tipping is telling someone material confidential information about a public company, whether in...

Why are insider trading and tipping illegal?

Insider trading and tipping violate the concept of fair capital markets...

Does it matter whether the person who violates the insider-trading laws lives outside the US?

The SEC has reciprocal agreements with many countries...

Do the rules of insider trading and tipping apply only in business contexts? Do they also apply to what I tell friends and family?

The rules apply to any confidential, important information that you reveal to anyone about your company. The SEC adopted...

My company's stock price has substantially dropped. As an executive, I want to buy the stock on the open market to show confidence to investors and analysts. Do I still need to worry about insider trading and liability for short-swing profits under Section 16?

Yes. Your intentions do not matter under the securities laws. You cannot...

What if at the time of sale I possessed inside information that did not affect my decision to sell? For example, what if I decided months before to exercise and sell stock when the stock price reached a certain point?

The law is evolving on this question of "use" versus "possession" of information. The SEC adopted rules in late summer 2000, but they are untested...

Aren't my stock-trading records confidential? How could the stock exchanges and the SEC get them and other information about me?

To detect irregular patterns of trading, each stock exchange uses a surveillance operation...

Will the SEC really investigate and prosecute small insider-trading violations?

When irregular trading activity is detected in a company's stock, all transactions made during the period under review are scrutinized...

Do I need to be caught in the act to be investigated or prosecuted?

No. Unless someone who is part of a scheme confesses, as in the movie Wall Street, direct proof rarely emerges...

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