Chair Gensler on 10b5-1 Trading Plans

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Yesterday, speaking at a conference, Securities and Exchange Commission Chair Gary Gensler shared some thoughts regarding Rule 10b5-1 plans and how the SEC might “freshen up” the rule. The Chair noted that currently there is no required cooling off period required when an insider establishes a plan and then makes a first trade pursuant to the trading plan. He noted that various proposals, requiring anywhere from four- to six-month cooling off periods from program establishment, have received bipartisan support and merit consideration. The Chair also noted that currently are no limitations on when 10b5-1 plans can be canceled, which seems “upside-down.” As a result, he has requested that the Staff consider limitations on when and how plans can be canceled. The Chair noted that there are no mandatory disclosure requirements regarding Rule 10b5‑1 plans, and that more disclosures regarding adoption, modification and terms of such plans would enhance confidence in the markets. Finally, he noted that there should be a limit on the number of plans that an insider could adopt.

The Chair also noted that he has asked the Staff to consider additional changes to the rule, including its intersection with company stock buybacks.

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