pwIn the following guest post, Susanna Buergel, Charles Davidow, Andrew Ehrlich, Brad Karp, Daniel Kramer, Richard Rosen and Audra Soloway, all of whom are litigation partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP who are members of the Firm’s Securities Litigation Practice group explain the significance of the Second Circuit’s decision United States v.

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

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). 

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

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

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,

Photo Sharing and Video Hosting at Photobucket 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