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The Rule 10b5-1 Buying Plan Challenge

Bruce Carton | September 7, 2008

In August 2008, West Marine (WMAR) founder and chairman, Randy Repass, did what thousands — probably hundreds of thousands — of corporate executives have done before him: he set up a Rule 10b5-1 trading plan to cover future transactions in his company's stock. According to an article in the Mercury News, Repass set up what he called a “Rule 10b5-1 Buying Plan” for this purpose.

[Insert sound of car tires screeching here]

Wait, what? Rewind that back. A Rule 10b5-1 Buying Plan? Yes, in a filing with the SEC, Repass, who already owns 28.8 percent of the West Marine shares outstanding, reportedly disclosed that he is setting up a buying plan because he thinks his company's stock is "undervalued and represents an attractive investment opportunity."

Rule 10b5-1 trading plans have been a popular option for corporate executives since their...

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