Insider trading – How a 10b5-1 plan may help reduce risk
Abstract: “Insider trading” is a highly charged term, but it’s not necessarily illegal for corporate insiders to buy and sell stock or other securities. Nevertheless, even well-intentioned trades by insiders can cause trouble for public companies. One of the most effective defenses against liability for illegal insider trading is a 10b5-1 trading plan that’s independently administered by a broker or other third party. This article explains how a 10b5-1 plan should be designed and describes best practices to follow even with such a plan. A sidebar discusses legal vs. illegal activities.