Facebook Implements New Insider Trading Policy

On Friday, Facebook implemented a new insider trading policy prohibiting employees from selling stock unless the trade occurs within a specified trading window. The company has also warned its employees about tipping others about inside information, The Recorder reports.

The new policy comes on the heels of a rise in online trading sites that allow people to trade shares of non-public companies like Facebook. According to The Recorder, securities lawyers agree that this is a legitimate concern, but that an even more significant issue may be the number of shareholders of the stock.

Under the “500-shareholder rule,” companies with more than 500 shareholders must make mandatory SEC disclosures similar to the way public companies must. The Recorder reports that in 2003, Google was forced to go public because it had more than 500 shareholders.

Read the The Recorder article