SEC takes aim at Rule 10b5-1 trading plans
Amendments impose significant new conditions to Rule 10b5-1 defense, as well as requiring disclosures for the first time about Rule 10b5-1 plans and insider trading policies
Under amendments adopted by the U.S. Securities and Exchange Commission, (the “SEC”), officers and directors of U.S. public companies will soon be required to satisfy additional conditions, such as cooling-off periods and certifications, in order to rely on Rule 10b5-1 of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) as a defense to insider trading charges. The amendments would also require registrants to make, for the first time, specific disclosures regarding Rule 10b5-1 trading arrangements, as well as their insider trading plans and procedures.
The new conditions to Rule 10b5-1 become effective 60 days after the amendments are published in the Federal Register, which means they will likely become effective at the end of February or early March 2023. The new disclosure requirements become effective later: registrants (other than smaller reporting companies) will be required to make the new disclosures on Forms 10- Q, 10-K, and 20-F and in any proxy or information statements in the first filing that covers the first full fiscal period that begins on or after April 1, 2023.