10b5-1 Plan
Also known as: Rule 10b5-1 · trading plan
DEFINITION
SEC Rule 10b5-1 lets corporate insiders set up an automated trading plan (sell X shares per month, or sell when stock hits $Y) when they have no material non-public information, then have trades execute automatically later — even after they learn insider information. The 2022 amendments added a 90-day cooling-off period for officers/directors and a 30-day period for issuers, plus enhanced disclosure on Form 4 (a checkbox flag).
WHY IT MATTERS FOR RETAIL INVESTORS
When a Form 4 sale is marked as a 10b5-1 transaction, treat it as low-information: the insider scheduled it months ago and could not legally cancel based on current events. Non-plan (discretionary) sales are far more informative — they signal active choice. Watch for executives who set up plans right before bad news; the cooling-off period was added precisely because abuses had become routine.
OFFICIAL SEC SOURCE
https://www.sec.gov/news/press-release/2022-222 ↗RELATED TERMS
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