Federal Prosecutors and Regulators Target 10b5-1 Plans - How to Mitigate Exposure and Maximize Compliance
By ELIZABETH NOE & REY PASCUAL
Recent newspaper reports have caused federal prosecutors and the SEC to launch investigations into whether certain corporate executives have engaged in improper trading of their companies shares. Most of the trades were made under Rule 10b5-1, which permits insiders to trade despite possessing nonpublic material information if they comply with the requirements of the rule. This alert suggests measures corporate executives and boards should consider to mitigate exposure and maximize compliance with both the letter and spirit of Rule 10b5-1.