What is a 10b5-1 trading plan?
A 10b5-1 plan is a written plan an insider sets up in advance to buy or sell company stock on a schedule or at set prices. Trades made under a plan adopted in good faith, without inside information, are protected from insider trading claims.
Executives come across confidential information all the time, so they can rarely trade without risk. A plan lets them sell (or buy) regularly anyway: the trades happen whatever they learn later.
The rules since 2023
- A cooling-off period before the first trade: for directors and officers, the later of 90 days after adopting the plan or two business days after the company's next quarterly report (up to 120 days); 30 days for others.
- Directors and officers must certify they have no inside information when they adopt it.
- Limits on overlapping plans and on single-trade plans.
- Form 4 has a checkbox for trades made under a plan, and companies disclose their insiders' plans.
What it means for investors
Planned trades were decided months earlier, so they say little about what the insider thinks today. HedgeFollow leaves them out of informative trades.
Related pages: Insider Trading Tracker