For many years, corporate executives have relied on pre-arranged trading plans (or "Rule l0b5-l plans") to buy or sell their company's stock. Recently, some academic studies have suggested that corporate executives may be misusing these plans to arrange profitable trades or avoid losses. Last December, the SEC proposed a series of rule amendments to address these concerns, but those amendments have not been finalized yet.
This past September, the SEC brought an enforcement action in which it charged two executives with insider trading for selling their company's securities pursuant to a Rule 10b5-1 plan while they were in possession of material non-public information. On the heels of that enforcement action Bloomberg, Reuters and others reported that the SEC and DOJ are conducting parallel investigations and sending subpoenas to several public companies regarding executives’ use of Rule 10b5-1 plans.
Recently, an expert panel of QE lawyers, including the former Chief of the DOJ's Fraud Section and former senior SEC Enforcement officials, recorded a webinar explaining the contours of Rule 10b5-1, the scope of the current SEC and DOJ enforcement actions, and steps that companies and executives can take to stay out of the government’s crosshairs.
To find out more about our Securities Enforcement Defense Practice, visit our website here: Securities Enforcement Defense Practice | Quinn Emanuel Urquhart & Sullivan, LLP