The D&O Diary

The D&O Diary


Category Archives: Insider Trading

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Rule 10b5-1 Trading Plans Under Scrutiny Once Again

Posted in Insider Trading, Securities Litigation
When the SEC brought civil enforcement charges against former Countrywide Financial CEO Angelo Mozilo in June 2009, a critical part of the agency’s allegations was that Mozilo had manipulated his Rule 10b5-1 trading plans to permit him to reap vast profits in trading his shares in company stock while he was aware of increasingly serious… Continue Reading

SEC Updates Rule 10b5-1 Guidance

Posted in Insider Trading
As reflected in the most recent dismissal motion rulings in the Countrywide subprime securities lawsuit, the proper use of a Rule 10b5-1 trading plan can provide a substantial defense to allegations of securities law violations. In her April 6, 2009 opinion (here), Central District of California Mariana Pfaelzer dismissed the insider trading allegations against certain… Continue Reading

Rule 10b5-1 Plans: Still a Good Idea

Posted in Insider Trading
Most of the focus on Rule 10b5-1 plans lately has been on possible abuses (refer, for example here). Indeed, one of the reasons the court cited in the dismissal motion denial in the Countrywide derivative lawsuit pending in California was concern about Angelo Mozillo’s possible manipulation of his 10b5-1 plan (refer here).    However, an October… Continue Reading

Building Better Rule 10b5-1 Trading Plans

Posted in Insider Trading
As a result of recent academic research (refer here and here) and other recent developments, Rule 10b5-1 trading plans have attracted critical attention, including SEC scrutiny (refer here). Allegations of alleged misuse of Rule 10b5-1 trading plans have even made their way into shareholder litigation. For example, allegations of Andrew Mozillo’s alleged misuse of his… Continue Reading

Rule 10b5-1 Plan Disclosure: Litigation Risk and Trading Benefit

Posted in Corporate Governance, Insider Trading, Securities Litigation
In October 2000, the SEC promulgated Rule 10b5-1 to provide company insiders with a way to trade their shares in company stock without incurring securities law liability, through the pre-trading adoption of a written trading plan. Despite the Rule’s protective purpose, concerns have arisen more recently about Rule 10b5-1 plan abuses, as I noted in… Continue Reading

Insider Trading: It Still Matters

Posted in Insider Trading
There is an understandable tendency to focus on emerging risks and latest trends, because new issues often are the most interesting and because no one wants to get blindsided by something coming over the horizon. But sometimes the old standard issues are the most important ones. Amidst all the hubbub about subprime lending, options backdating,… Continue Reading

Rule 10b5-1 Plans Drawing Scrutiny

Posted in Insider Trading
Those who remember that the options backdating scandal first got started with an academic study may want to take a close look at a recent research paper examining Rule 10b5-1 plan trading. The paper, and subsequent press coverage and comments, suggest that questionable trading in Rule 10b5-1 plans could become the focus of the next… Continue Reading