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Last month, Dave blogged about the uncertainty surrounding whether Item 408(a) disclosure is required in periodic reports when no director or officer has adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5–1 trading arrangement during the quarter. The problem is baked into the language of Item 408(a)(1) itself – the line item calls on registrants to disclose “whether, during the registrant’s last fiscal quarter” any director or officer adopted or terminated a trading plan. The use of the word “whether” has prompted some practitioners to conclude that the line item may impose an affirmative obligation to disclose that no such plan has been entered into.

Unfortunately, that interpretive issue wasn’t addressed in the CDIs, but over on our Q&A Forum (Topic # 11752), a member shared the Staff’s informal guidance in response to a question on how to address this disclosure requirement in Item 5 of Part II of Form 10-Q:

I spoke to the Staff yesterday. The staff told me that their current view is that negative disclosure is not required notwithstanding the “whether” language. However, they said the Staff is still reviewing this and may issue some more definitive guidance. Meanwhile I did a quick survey of how companies completed Item 5, and many responded “none” or even omitted Item 5.

I suppose the fact that Corp Fin didn’t address this topic in this batch of CDIs may mean that the Staff is still kicking it around, so stay tuned.

– John Jenkins