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Liz blogged a couple of weeks ago about of Rule 10b5-1 plan “cooling off” periods – it’s one topic being evaluated as a potential reform to Rule 10b5-1. A recent King & Spalding memo discusses potential reforms that the SEC will most likely consider and one involves increased public disclosure of 10b5-1 trading plans. Today, company practice varies when it comes to public disclosure of trading plans, one reason being that disclosure requirements about such plans are minimal. The memo says it’s likely any Rule 10b5-1 reform proposal will include enhanced disclosure requirements and a challenge could be determining the level of detail for disclosure. Here’s an excerpt with thoughts on that:

The more difficult question for the SEC will be the level of detail required to be disclosed. While disclosure of basic plan details – such as the date of adoption, the date range of anticipated trading, and the anticipated number of shares to be traded – might garner broad support, excessive disclosure of granular plan details or of the plan’s specific mechanics, algorithms, and trading strategies could raise personal privacy concerns with little obvious benefit to ordinary investors. Furthermore, disclosure of plan details may invite trading designed to disrupt or front-run an executive’s planned trading. A requirement that Form 4 filings explicitly indicate whether a trade was made pursuant to a Rule 10b5-1 plan also seems likely, as does a requirement, as discussed further below, that Rule 144 filings (which already require the filer to at least disclose the date of adoption of any plan pursuant to which a sale is made) be filed electronically and made available to the public through the EDGAR system.

With potential Rule 10b5-1 reforms on the way, be sure to tune-in for our July 20th webcast – “Insider Trading Policies & Rule 10b5-1 Plans” for guidance and tips about revisiting your insider trading policy & trading plans. We’ve got an all-star panel lined up, don’t miss it!

– Lynn Jokela