As Info >>>> New Rule 10b5-1 would create insider-trading liability for anyone who traded while aware of material inside information.
This rule stands in stark contrast to federal court rulings that have required proof that a person charged with insider trading "used" material insider information.
The new rule does provide a very narrow defense for trades made pursuant to binding contracts, instructions or written plans that are in place before an insider becomes aware of any material inside information.
This defense, however, is only available if the arrangement expressly specifies the amount, price and date of any trades or gives some third party complete discretion over trading.
In addition, the defense is lost to any person who alters or deviates from the contract or plan or who enters into or alters any hedging transactions.
For a number of years, securities lawyers have advised corporate insiders to dispose of their stock on a consistent, periodic basis to avoid allegations that a particular trade was motivated by material inside information.
Indeed, a number of courts have held that a history of such trading will protect an insider from insider trading charges when they sell prior to a significant drop in their stock.
Under the new rules, however, a regular pattern of trading is no protection unless it was conducted in strict accordance with a contract or written plan meeting the specific requirements of the rule.
Rule 10b5-2 expands the circle of people who are liable for insider trading when they trade on the basis of a tip received from someone else.
Under the new rule, people who received material inside information from their parents, spouses, children, siblings or others with whom they have a history of sharing confidences will now be liable for insider trading if they subsequently trade on the basis of that information.
Songs I Luv
( NEWER )
( NEW )
