Law360 (July 7, 2006, 12:00 AM EDT) -- Corporate insiders—officers, directors and large shareholders—often sell company stock on a pre-set schedule under automatic trading agreements. These agreements are sometimes referred to as “Rule 10b5-1 trading plans” because of a regulation passed six years ago by the Securities and Exchange Commission.
Rule 10b5-1 allows a corporate insider who sells company stock under such a plan to put forward an affirmative defense when accused of insider trading—that is, trading on the basis of non-public information.
Defendants in securities lawsuits have increasingly argued that this safe harbor...
The Incentive To Commit Securities Fraud Under Automatic Trading Plans
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