Refreshing Insider Trading Ahead of Mandatory Public Disclosure
Recent SEC Focus on Insider Trading Insider trading has been a focus of recent regulatory rulemaking and enforcement. In December 2022, the SEC adopted significant rule changes designed to curb perceived abuse of Rule 10b5-1, which allows insiders to avoid liability for trades executed under a prearranged plan that was put in place when they […]
Harold Halbhuber is a Partner and Katya Bogdanov is an Associate at Shearman & Sterling LLP. This post is based on their Shearman memorandum. Related research from the Program on Corporate Governance includes Insider Trading via the Corporation (discussed on the Forum here) by Jesse M. Fried.
Recent SEC Focus on Insider Trading
Insider trading has been a focus of recent regulatory rulemaking and enforcement. In December 2022, the SEC adopted significant rule changes designed to curb perceived abuse of Rule 10b5-1, which allows insiders to avoid liability for trades executed under a prearranged plan that was put in place when they did not have material nonpublic information (MNPI). In a rare display of unity, all five SEC Commissioners voted to approve these changes. March 2023 saw the first ever insider trading prosecution based exclusively on the use of Rule 10b5-1 trading plans, when the Department of Justice (DOJ) charged the CEO of a health care company for his allegedly fraudulent use of such plans to trade company stock.[1] And just a few months ago, in June 2023, the SEC announced charges against 13 individuals, including corporate executives and insiders, in four separate insider trading schemes, with the DOJ bringing concurrent criminal actions against most of the defendants.[2]
