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On December 15, 2021, the SEC proposed significant changes to the requirements for Rule 10b5-1 trading plans, including: 

  • Cooling-off periods for insiders and companies
  • Prohibition on overlapping plans
  • Certifications by insiders
  • Only one bullet plan every 12 months
  • Good faith requirement for the operation of trading plans

In addition to increased disclosure requirements for trading plans, equity grant policies and insider trading policies, the proposals would require Form 4 reporting of stock gifts within two business days.  This increased transparency reflects the SEC’s view that gifts of stock can violate Section 10(b) if, among other things, the insider was aware of material nonpublic information and knows or should know that the donee would sell the shares before disclosure of such information.

We have prepared a client alert summarizing the proposal in more detail.