Some insiders were selling shares less than a month after adopting their plans, sometimes even the same day, or adopting and initiating trading plans right before earnings announcements. Another trick has been to adopt multiple 10b5-1 plans and later selectively cancel the ones that wouldn’t work to the insider’s benefit. Potential abuses of 10b5-1 plans were the subject of a Wall Street Journal article in June that was cited in the SEC’s final rule.
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Just as the old rule begot new manipulations, the new rule won’t eliminate them all. The SEC noted concern that some insiders might time market-moving disclosures around insiders’ prescheduled trading dates, delaying the release of bad news until after scheduled sales or accelerating the release of positive news so it comes out beforehand.
Source: New SEC Rules Target Corporate Insider Trading – WSJ
