Replies to post #5045 on Zion Oil & Gas Inc (ZNOG)

[tisdal]

Harvard Law will make sense of it

Stock is routinely an important part of public company compensation, but insider trading restrictions (e.g., blackout periods and exposure to material non-public information (MNPI)), can pose a significant challenge to selling corporate stock. Rule 10b5-1 of the Securities and Exchange Commission (SEC) presents a valuable solution to such a dilemma, but there are nuances that need to be understood. Internal and external legal counsel should be familiar with the terms and application of the rule, which covers more situations than the common scenario.


Benefits of Rule 10b5-1 Plans

Rule 10b5-1 plans provide an affirmative defense for companies and those presumed to be “insiders” (i.e., directors and officers) transacting in the relevant company’s securities. These plans have become relatively commonplace, but from time to time, they have attracted attention, usually in response to media coverage of enforcement action by the SEC or reports of suspicious activity. The instances of public scrutiny have demonstrated the unraveling of perceived abusive plan practices such as establishing multiple plans, making excessive modifications to plans or limiting plan duration. Recently, the SEC has increased its enforcement activity for violations of Section 16 reporting obligations, which demonstrates a renewed focus on insider trading activity, [1] a landscape that Rule 10b5-1 plans also occupy.

Harvard Law on insider trading programs that comply with SEC

My friend had to sign up for this type of plan at the pharmaceutical company due to his level of exposure and knowledge with respect to development of new products.