December 8, 2022

SEC to Consider Rule 10b5-1 Changes Next Wednesday

The SEC announced that it will hold an open meeting next Wednesday to consider various matters, and one of the agenda items is to consider adoption of the amendments to Rule 10b5-1 and related disclosure changes proposed back in December 2021.

The SEC proposed to modify the conditions for the use of Rule 10b5-1 plans to include: (i) imposing a cooling-off period before trading could commence under a trading plan; (ii) prohibiting overlapping trading plans; and (iii) limiting single-trade plans to one trading plan per 12-month period. The SEC also proposed to require disclosure of policies and procedures related to insider trading and company practices around the timing of option grants and the release of material nonpublic information. Under the proposal, insiders would be required to disclose the use of Rule 10b5-1 plans in Forms 4 and 5. The SEC also proposed to require that bona fide gifts of securities, which are currently permitted to be reported by insiders on a delayed basis using Form 5, must be reported more quickly on Form 4.

– Dave Lynn