April 13, 2022

SEC 10b5-1 & Insider Trading Proposal: Notable Comment Letters

As John blogged a couple of months ago, the comment period for the SEC’s proposal to modernize Rule 10b5-1 officially expired on April 1st – and 169 letters are now posted. Here are a few notable submissions:

Shearman & Sterling – suggesting modifications to the proposal that would lessen the burden on companies

Davis Polk – responding to a large number of the Commission’s specific requests for comment, including support in principle for a narrow and shorter D&O cooling-off period, but not supporting a cooling-off period for company plans

Sullivan & Cromwell – identifying areas of concern for the proposal being too broad & burdensome, and urging a transition period of at least 12 months if the proposal is adopted

Cravath – generally supportive of Commission efforts to prevent abuse of the affirmative defense and increase transparency around Rule 10b5-1 – e.g., supportive of a D&O cooling-off period – but unaware of empirical evidence suggesting abuse in the context of share repurchases that would justify the additional costs imposed by proposed restrictions on issuer trades

Dorsey & Whitney – raising questions & potential resolutions with respect to the operation of open market employee stock purchase plans

Liz Dunshee