NewStream Energy Technologies Group Inc (NSGP)

[trader53]

10b5-1 Plan: Planned Insider Purchases and Sales

The SEC adopted Rule10b5-1 to protect executives from charges of insider trading by allowing them to legally buy or sell shares in their company even if they are aware of material non-public information so long as the trade was specifically laid out in a plan before the executive became aware of the information. A 10b5-1 plan needs to predetermine the number of shares to be traded, at what price and on what date. For example, a plan might say: “Sell 10,000 shares on the first day of each quarter, at a price no lower than $50 per share.”

A 10b5-1 plan must be established through a third party, but does not need to be filed with the SEC. The only way we get to learn that a transaction is planned is by examining footnotes on the Form 4 filings for references to 10b5-1. Here is a sample Form4 filing, note the following text in the footnote of the filing: “Open market purchase pursuant to a 10b5-1 trading plan adopted by the Reporting Person in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.”



http://blog.form4oracle.com/2009/09/29/10b5-1-plan-planned-insider-purchases-and-sales/