The Securities & Exchange Commission introduced amendments to Rule 10b5-1, which went into effect in phases beginning on February 27, 2023.
The amendments, which are intended to enhance investor protections against insider trading, include additional requirements such as cooling-off periods, certifications of acting in good faith and restrictions on multiple, overlapping plans. After the amendments, the rule still has the same foundational purpose but with additional restrictions and requirements to increase transparency and prevent abuse of material nonpublic information (MNPI).
These recent 10b5-1 amendments emphasize the importance of understanding and incorporating the latest regulatory changes when you’re evaluating your equity compensation programs.