The ghost of insider trading investigations may be haunting the corporate landscape again these days, but judicious use of a “Rule 10b5-1 plan” to sell stock can still provide solid protection for executives who want to avoid the specter of a visit from the Securities and Exchange Commission.
The chief of the SEC’s Enforcement Division, Linda Chatman Thomsen, caused a stir last month when she warned that the Commission would be looking “hard” at trading conducted pursuant to Rule 10b5-1. “We want to make sure that people are not doing here what they were doing with stock options,” Thomsen said in a March 8 speech. “If executives are in fact trading on inside information and using a plan for cover, they should expect the ‘safe harbor’ to provide no defense.”
