Summary: Dorsey partners Parker Schweich and Mandana Massoumi discuss in The Los Angeles Daily Journal increased regulatory scrutiny of Rule 10b5-1 trading plan disclosures. Under Securities and Exchange Commission (SEC) regulations, corporate insiders can secure an affirmative defense to insider trading allegations if they enter into a written 10b5-1 trading plan to make prearranged periodic sales of company stock. The Director of the SEC Enforcement Division recently commented that his investigators are looking at whether 10b5-1 trading plans are being used as "cover" for insider trading.
Schweich and Massoumi suggest that companies should consider developing 10b5-1 trading plan policies to ensure their insiders meet the conditions of the rule. They then provide a checklist of recommendations for implementing such a policy.
The full article is available for download at the PDF link above.
"Trading Spaces" was published by The Los Angeles Daily Journal, March 3, 2008.