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Liz has blogged a couple of times about some of the comments on the SEC’s Rule 10b5-1 proposal, and Dave recently hosted a podcast with Stan Keller, who helped draft the ABA comment letter on the proposal.  Now, just to make sure you’re completely up to date, here’s a recent Bryan Cave blog that reviews representative comments from the business and investor communities. I’m sure that it will come as no surprise that most investor groups were in favor of the proposal, while most business groups didn’t think much of it.

Among other things, most business groups commenting on the proposal called for shortening or eliminating the proposed 120-day cooling off period, clarifying or narrowing the proposed restrictions on multiple overlapping plans, and eliminate the certification and insider trading plan disclosure requirements.  As this excerpt indicates, commenters zeroed in on the SEC’s statements about the potential that gifts might be subject to insider trading liability:

As noted in our December 16 client alert, the SEC included in its proposals a cautionary warning about the timing of gifts of securities. Some commenters strongly objected to the SEC’s warning, noting the absence of any judicial or SEC precedent for its position, and its failure to explain the circumstances where a charitable gift would involve a fraudulent breach of trust and confidence. Instead, a donor should be able to avoid insider trading liability by obtaining the charitable donee’s commitment not to dispose of the securities until any MNPI known by the donor at the time of the donation has become public or stale.”

I’m not a big fan of a number of the proposed changes to Rule 10b5-1, and I’m glad to see that those who actually work with the rule on a regular basis appear to have weighed in during the comment period. We’ll see if they carry any weight with the commissioners.

– John Jenkins