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Last week’s stay put a pause on the requirement to disclose Rule 10b5-1 plans that companies adopt to effect stock buybacks, but it doesn’t affect the requirements to disclose Rule 10b5-1 plans adopted by directors & officers. Those requirements stem from a separate rule that is already in effect (you can visit our “Rule 10b5-1 Plans” Practice Area for lots of practical guidance on what to do).

A recent Form 8-K and WSJ article underscore that plan disclosures get attention and should be handled with care. Here’s an excerpt:

Dimon, the chief executive, intends to sell one million of his current 8.6 million shares “for financial diversification and tax-planning purposes,” the bank said Friday in a filing.

After years of accumulating shares and using his buying as a signal of his belief in the bank, the shift to paring back is likely to raise questions about how much longer the 67-year-old Dimon intends to stay at the helm and whether he is beginning to contemplate the next steps.

This particular article is reporting on Jamie Dimon’s Rule 10b5-1 plan to sell 12% of his current holdings in JPMorgan Chase beginning in 2024. It notes that the company’s stock price dropped by 3.6% on the day the plan was announced. But it also is careful to point out:

But the bank said Friday that his planned stock sale wasn’t a change in his direction. And there are other signs that he isn’t dumping stock because of a change of heart.

He could sell all one million shares today, as it is currently an open window for JPMorgan executives. Instead, he set up a plan to sell them starting in the coming year at predetermined intervals or prices, showing he isn’t rushing for the exit. Such plans are common for executives. He will still own $1 billion in stock after the sales.

Obviously, not every plan adoption will be headline news like this one, which the company voluntarily reported on Form 8-K in advance of the required quarterly disclosure. But you also can’t count on every media outlet explaining the nuance of planned trading like an experienced WSJ reporter, or the market understanding those nuances.

So, keep in mind that as you prepare for the usual flurry of year-end transactions and look ahead to your Form 10-K, insider ownership reporting will be more sensitive than ever. Investors may read into the cumulative number of shares that an insider plans to sell, even if the shares are being “trickled out” over a long time period and may not have drawn as much attention if each trade was simply reported separately on a Form 4. And if you haven’t already done so, don’t forget to freshen up your internal controls to ensure that you properly report these plans in the first place.

If you haven’t renewed your Section16.net membership for 2024, now is the time! You don’t want to miss Alan Dye’s take on the latest developments, which he’ll be sharing in his annual webcast on that site on January 24th. Contact info@ccrcorp.com if you have questions about your renewal or sales@ccrcorp.com if you want to begin a new membership.

– Liz Dunshee