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SEC Law: Rule 10b5-1 Trading Plans

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Articles (Jump to FAQs)

The Equity Compensation Planning Dilemma For Corporate ExecutivesThis is premium content

Geoffrey M. Zimmerman, CFP®
Podcast included! Executives must carefully balance the demands of many constituencies interested in their company's stock. Explores ways to manage these pressures while achieving financial goals.

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

Darryl Rains and Sunil Kulkarni
SEC rules, company insider-trading policies, and fears of insider-trading allegations may make stock sales tricky for corporate insiders. Rule 10b5-1 trading plans offer a potential solution, but they must be properly drafted and implemented.

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

Darryl Rains and Sunil Kulkarni
A Rule 10b5-1 trading plan is an ideal solution when SEC regulations and corporate insider-trading policies would otherwise keep you from selling your shares. However, to be effective these plans must be properly implemented. Part 2 explores their restrictions and flexibility, and how to disclose them.

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

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.

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FAQs (Jump to articles)

What is a Rule 10b5-1 trading plan?

SEC Rule 10b5-1 provides a defense against charges of insider trading if you later trade stock while you know confidential, important information about your company. A Rule 10b5-1 trading plan is a program for the preset purchase and/or sale of your stock that meets the requirements of this SEC rule, including the need to...

What are best practices for Rule 10b5-1 trading plans?This is premium content

SEC Rule 10b5-1 does not have many details on setting up and operating these prearranged stock-trading plans. Best practices have evolved for companies and insiders to follow. These include...

I want to set up a program with my company and broker in which I automatically exercise options and sell stock to pay a regularly expected bill as it's received, such as my child's tuition. Can this prearranged selling plan violate insider trading laws and my company's blackout rules?This is premium content

SEC Rule 10b5-1 now provides an affirmative defense...

How widely used are Rule 10b5-1 trading plans? Is survey data about their use available?This is premium content

Surveys show an increase in the use of Rule 10b5-1 plans...

How long do Rule 10b5-1 trading plans last?This is premium content

According to experts, most Rule 10b5-1 plans cover...

Can I make trades in company stock outside the Rule 10b5-1 plan?This is premium content

Only a few companies actually require insiders to have 10b5-1 plans. However...

Can my company force me to use a Rule 10b5-1 trading plan? Can it prohibit me from using one?This is premium content

Companies can adopt insider-trading policies or Rule 10b5-1 plans and make them a condition of accepting any stock grants. Some companies' policies on insider trading actually...

Is it possible to violate insider-trading laws by terminating or modifying my Rule 10b5-1 trading plan?This is premium content

A properly developed Rule 10b5-1 plan offers you an affirmative defense against charges of insider trading. However, it is possible to lose the protection of the rule by canceling or modifying the plan while...

Should I set up a Rule 10b5-1 trading plan to cover the stock I will sell or surrender to pay withholding taxes when my restricted stock vests?This is premium content

Both Rule 10b5-1 and the broader use of restricted stock and RSUs are new, so practices and procedures are evolving. Companies are considering the widespread use of Rule 10b5-1 plans for this...

Can I sell my company stock through a blind trust, or another type of trust, as a defense against insider trading?This is premium content

Using a blind trust goes beyond the protections of Rule 10b5-1 plans, yet has more restrictions. These are irrevocable grantor trusts with...

What will happen to my Rule 10b5-1 plan if I die?This is premium content

Ordinarily, a 10b5-1 plan ends if you die. However...

When I sell stock under a Rule 10b5-1 plan, do I report the sale differently on Form 4?This is premium content

Only transactions prompt the need for filings: the mere adoption of a 10b5-1 trading plan is...

Must I suspend my Rule 10b5-1 plan if my stock trade date occurs during a sudden blackout period?This is premium content

If all the requirements for Rule 10b5-1 plans are met...

My company is private. Can I set up a Rule 10b5-1 trading plan now so that I may start selling after the IPO lockup period?This is premium content

When you set up a Rule 10b5-1 trading plan, one of the key requirements is that you must not...

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