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Browse: Home / 2016 / June / 10 / SEC Needs to Rewrite its 10b5-1 Safe Harbor Rules | CLS Blue Sky Blog

SEC Needs to Rewrite its 10b5-1 Safe Harbor Rules | CLS Blue Sky Blog

By Securities Docket on June 10, 2016, 7:57 am

While it is illegal for insiders to trade on material, non-public information, the SEC has created a safe harbor Rule 10b5-1 since October 2000, by allowing insiders to set up trading plans in advance of actual trading.[1]  Since these planned trades are set up in advance of subsequent trading, they allow insiders to buy and sell shares despite possessing material non-public information at the time of the trade, and consequently, they can serve as an affirmative defense in case of litigation.   However, these plans are not foolproof.  There is growing suspicion among both finance and legal experts that significant loopholes exist in the design and execution of these plans and that the plans are being abused to hide more informed insider trading.  We decided to investigate by examining profitability of all planned transactions under the 10b5-1 rule.

via SEC Needs to Rewrite its 10b5-1 Safe Harbor Rules | CLS Blue Sky Blog

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Posted in SEC, Top | Tagged Rule 10b5-1

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