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10b5-1 Plans: Ten Things Execs, Boards Should Do

Law360 (December 13, 2007, 12:00 AM EST) -- In striking similarity to the analysis that precipitated the option backdating cases, recent SEC attention is focused on reports of seemingly fortuitous returns generated by executives selling shares under automatic trading or “Rule 10b5‐1 Plans.”

The heightened scrutiny follows an earlier study by a Stanford University School of Business professor that suggested returns under Rule 10b5‐1 trading plans were substantially better than would be expected if the trading were truly automatic.[1]

Without reaching any legal conclusions, the study hypothesized that the statistically abnormal returns possibly resulted...
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