10b5-1 Planificar Opciones De Compra De Acciones

Servicios de Ejecutivo Corporativo

Los ejecutivos de las empresas públicas tienen necesidades específicas, que garantizan un nivel de servicio diferente. En el entorno actual de comercio en línea y "hágalo usted mismo actitud", es el servicio personal que los servicios ejecutivos corporativos de Stifel (CES) proporcionan que nos distingue. Los servicios que CES proveen incluyen:

¿Qué hace que CES en Stifel sea único?

Tratamos las operaciones más pequeñas de la misma manera que tratamos las operaciones más grandes. Entendemos que sea cual sea el tamaño, es su comercio y usted demanda un servicio excelente; Y eso es lo que ofrecemos - excelente servicio.

CES ofrece un servicio personalizado

Participamos en llamadas de conferencia con Stifel Financial Advisors, sus clientes y el asesor del emisor, donde sea necesario, para discutir cada transacción individual.

Cuando sea apropiado, aseguramos que todos los requisitos de la Regla 144 están satisfechos antes de la ejecución de una operación. Prepararemos la documentación de la Regla 144 para su firma y archivaremos el Formulario 144 con la SEC.

Ayudamos con la elaboración de estrategias de los términos de un Plan de la Regla 10b5-1.

El CES redactará un plan de la Regla 10b5-1 para su revisión por parte del iniciado y del abogado del emisor.

Al finalizar una transacción para un iniciado, CES reportará el comercio al abogado del emisor en un esfuerzo por asegurar la presentación oportuna del Formulario 4 por el emisor.

Coordinación con todas las partes involucradas para ejercicios de opciones sobre acciones o pago de impuestos RSU / RSA para asegurar la liquidación oportuna de la transacción.

Acelerar las transacciones de acciones restringidas para el pago lo más cercano posible a la liquidación.

Ventas de Control y Acciones Restringidas

Los profesionales de CES de Stifel están perfectamente capacitados en las reglas que rigen todo tipo de transacciones bajo la Regla 144 y se mantienen al tanto de cualquier cambio relevante en las reglas. Para las transacciones con información privilegiada, nuestro grupo archiva toda la documentación requerida en la Regla 144. También notificamos al emisor de una manera oportuna de todas las transacciones completadas para que un Formulario 4 pueda ser presentado dentro de dos días hábiles de la transacción.

Regla 10b5-1 Planes

Los planes de la Regla 10b5-1 presentan a los iniciados la oportunidad de establecer acuerdos para vender y / o comprar acciones de la compañía sin la restricción impuesta por las ventanas y los períodos de apagón. Stifel tiene varios planes estandarizados. Son:

Para la venta de acciones de propiedad actual

Financiación del ejercicio de las opciones sobre acciones de los empleados

El financiamiento de los impuestos adeudados por la adquisición de las unidades de acciones restringidas (RSU) o las acciones restringidas (RSAs)

Un plan de combinación que involucra la venta de acciones de propiedad actual y el financiamiento de los impuestos para un ejercicio de opciones sobre acciones o los impuestos debidos sobre la adquisición de RSUs / RSAs.

Un plan para la compra de acciones de la empresa

Préstamos sobre acciones de control

En lugar de vender sus acciones, algunos iniciados prefieren tomar prestado contra sus acciones para diversificar. Stifel, en algunos casos, puede ser capaz de proporcionar una información privilegiada con un préstamo sobre el stock de su empresa.

Financiamiento de Opción de Compra de Acciones

Los iniciados pueden tener opciones sobre acciones que tendrán que ser ejercidas o RSUs / RSAs que están adquiriendo derechos e impuestos que deben ser pagados. Es posible que no quieran perturbar sus ahorros actuales para pagar el costo de ejercicio (e impuestos, si aplica) o los impuestos debidos en el chaleco de una RSU / RSA. Mientras que los planes de beneficios de acciones del emisor hayan sido registrados de acuerdo con una Declaración de Registro de S-8, Stifel puede ser capaz de financiar los costos de un iniciado asociados con cualquiera de estos eventos. Tenemos dos métodos que pueden ser utilizados; El ejercicio y la venta y, en circunstancias apropiadas, el ejercicio y la retención.

Derecho Empresarial Hoy

Regla 10b5-1 Planes

Mantenerse fuera de los problemas

Por Brandon C. Parris

En agosto de 2000, la Securities and Exchange Commission (SEC) adoptó la Regla 10b5-1 bajo la Securities Exchange Act de 1934, estableciendo que una persona puede enfrentarse a un pasivo de información privilegiada para negociar valores, mientras que "consciente" De información material, no pública sobre el emisor o sus valores, incluso si la persona realmente no utiliza & quot; Información para hacer el comercio. Este estándar amplió perceptiblemente las circunstancias en las cuales una persona podría hacer frente a la responsabilidad para el abuso de información privilegiada. Sin embargo, en relación con la adopción de la Regla 10b5-1, la SEC también adoptó varias defensas afirmativas, o excepciones a la responsabilidad. Estas defensas afirmativas permiten efectivamente a una persona negociar valores en circunstancias en las que de otra manera podrían estar al tanto de información material no pública en el momento de la operación, sin responsabilidad bajo la Regla 10b5-1, donde está claro que dicha información no fue un factor en La decisión de la persona de comerciar. De las defensas afirmativas, una de las más comunes es el uso de un plan de comercio escrito preexistente que cumple con los requisitos de la Regla 10b5-1 (c), el llamado plan 10b5-1. En pocas palabras, un plan 10b5-1 debidamente implementado puede permitir a un ejecutivo la flexibilidad para comprar o vender valores en un momento en que el ejecutivo es consciente de información material, no pública, proporcionando al ejecutivo una defensa afirmativa a posibles acusaciones de abuso de información privilegiada.

Recientemente, los planes 10b5-1 han sido sometidos a un intenso escrutinio. A finales de 2006, un estudio académico sugirió que las ventas bajo los planes 10b5-1 examinados eran, en promedio, generando retornos comerciales anormales, y que tales planes 10b5-1 parecían estar generalmente superando al mercado. En octubre de 2007, Linda Thomsen, Directora de Ejecución de la SEC, pronunció un discurso en el que indicaba que la SEC estaba examinando de cerca los posibles abusos de las personas en relación con los planes 10b5-1. Esto siguió el testimonio del congreso de la Sra. Thomsen en septiembre de 2006 cuando indicó que la SEC, debido a las acusaciones crecientes de demandas del uso de información privilegiada, iba a moverse "agresivamente" En la investigación de tales reclamaciones.

Con el mayor enfoque en el abuso de información privilegiada y el escrutinio intensificado que rodea los planes 10b5-1, es importante adherirse a las buenas prácticas en relación con la adopción y el uso de los planes 10b5-1 si se preservan los beneficios de la defensa afirmativa. El incumplimiento de los requisitos de la Regla 10b5-1 (c) en relación con la adopción y uso de un plan 10b5-1 puede llevar a consecuencias desastrosas, incluyendo la pérdida potencial de la defensa afirmativa y la exposición a las sanciones civiles y penales por el abuso de información privilegiada.

10b5-1 Requisitos del plan

Al adoptar un plan 10b5-1, es importante asegurarse de que se cumplen los requisitos necesarios de la Regla 10b5-1 (c). Además, los emisores deben asegurarse de que sus políticas y procedimientos con respecto a los planes 10b5-1 sean seguidos y aplicados.

&toro; Satisfacer los requisitos mínimos. Para obtener una protección de la defensa afirmativa, es importante asegurar, a pesar de lo complejo o simple que sea un plan 10b5-1, que en un mínimo, los requisitos especificados de la defensa afirmativa para el uso de los planes 10b5-1 establecidos En la Regla 10b5-1 (c). Estos requisitos incluyen:

(1) adoptar el plan escrito 10b5-1 antes de tomar conocimiento de cualquier información material, no pública, como se describe con mayor detalle a continuación;

(2) asegurar que los términos del plan 10b5-1 especifican (a) el monto y el precio de los valores a ser comprados o vendidos y las fechas para tales compras o ventas, o (b) una fórmula o algoritmo escrito o computadora Programa que determina la cantidad y el precio de los valores a ser comprados o vendidos y las fechas para tales compras o ventas;

(3) asegurar que los términos del plan 10b5-1 no permitan que el ejecutivo ejerza una influencia subsiguiente sobre cómo, cuándo o si las compras o ventas se realizarían bajo el plan, y asegurando además que si los términos del artículo 10b5 -1 permitir que un tercero ejerza tal influencia posterior, dicho tercero no lo hace en un momento en que tenga conocimiento de información material, no pública;

(4) poder demostrar que la compra o venta de los valores realmente ocurrió de acuerdo con los términos del plan 10b5-1;

(5) no alterar o desviarse de los términos del plan 10b5-1 (cambiando el monto, el precio o el momento de la compra o venta de los valores cubiertos por el plan 10b5-1) y no entrar o alterar un Transacción o posición correspondiente o de cobertura con respecto a los valores cubiertos por el plan 10b5-1; y

(6) asegurando que el plan 10b5-1 fue firmado de buena fe y no como parte de un plan o esquema para eludir las prohibiciones de la Regla 10b5-1.

&toro; Satisfacer la ausencia de material, requisito de información no pública. Posiblemente el elemento más escrutado de la defensa afirmativa es si un plan 10b5-1 fue adoptado en un momento en que el ejecutivo estaba libre de cualquier información material, no pública con respecto al emisor o sus valores. Si bien este requisito debe ser satisfecho en el momento de la adopción del plan, el requisito puede ser examinado meses, oa veces años, más tarde con el beneficio de la retrospección. Uno puede imaginar una multitud de eventos corporativos o temas que, mientras que en el momento de la adopción del plan 10b5-1 puede no parecer material, pero con retrospectiva después del paso del tiempo, se puede transformar posteriormente en algo que parece muy material. Ejemplos incluyen, entre otros, reclamos legales potenciales que posteriormente se convierten en litigios importantes, discusiones preliminares de transacciones (como una posible fusión o adquisición / disposición de activos que involucran al emisor) que luego se convierten en una transacción públicamente anunciada o signos preliminares de un potencial La desaceleración en el negocio del emisor que más tarde se traduce en una reducción real en el negocio del emisor (que tiene un impacto negativo en los resultados financieros del emisor). Como tal, es importante antes de adoptar un plan 10b5-1 que el ejecutivo se sienta muy cómodo de que no hay información pendiente que, en ese momento o más tarde, con retrospectiva, podría ser interpretado como material. En la medida en que un ejecutivo está contemplando la adopción de un plan 10b5-1 en un momento en que el ejecutivo es consciente de la información no pública que no es entonces percibida como material, pero más tarde podría llegar a ser material (como en los ejemplos discutidos anteriormente) Se debe considerar si la adopción del plan 10b5-1 en ese momento es prudente.

&toro; Observe las formalidades corporativas. Los ejecutivos sujetos a las políticas y procedimientos de información privilegiada del emisor deben asegurar que la adopción del plan 10b5-1 cumpla con las formalidades de dichas políticas y procedimientos. Normalmente, la política de negociación de información privilegiada del emisor exigirá que los planes 10b5-1 sean preclareados y adoptados solamente en un periodo de ventana abierta (por ejemplo, el período en que se permite la negociación de los valores del emisor conforme a los términos de la póliza). Asimismo, para minimizar el riesgo de publicidad negativa y escrutinio potencial, el emisor a menudo querrá asegurarse de que, además del ejecutivo, el emisor esté libre de cualquier información material no pública en el momento en que el ejecutivo adopte el plan. La mayoría de las firmas de corretaje también requieren que el consejero general del emisor o cualquier otro administrador de la política de información privilegiada confirme afirmativamente que los términos del plan 10b5-1 propuesto no entran en conflicto con la política de información privilegiada del emisor.

&toro; Considere la Divulgación Pública. La práctica es mixta en cuanto a si la adopción de un plan 10b5-1 debe ser anunciada públicamente a través de comunicados de prensa u otra forma de comunicación pública. Al anunciar al público que un ejecutivo ha adoptado un plan 10b5-1 puede proporcionar una cierta cantidad de transparencia, debe evitarse la divulgación asimétrica. En el discurso de la Sra. Thomsen en octubre de 2007, indicó que la SEC está centrada en las prácticas de divulgación asimétrica de los emisores, tales como anunciar públicamente que un ejecutivo ha adoptado un plan 10b5-1 pero no ha anunciado (a tiempo o de otro modo) Ha sido modificado o terminado. Mientras que los ejecutivos que presentan un Formulario 144 en relación con una operación son ahora requeridos, de acuerdo con las enmiendas recientemente promulgadas a la Regla 144, para especificar si el comercio era conforme a un plan 10b5-1, los ejecutivos deberían hacer revelaciones similares en sus informes de la Sección 16 ; Tal divulgación puede ayudar a facilitar a un juez o tribunal la capacidad de tomar aviso judicial del plan del ejecutivo 10b5-1 en el caso de que el ejecutivo esté defendiendo contra una acción que alega el uso de información privilegiada.

Formulación de un Plan 10b5-1

Si un ejecutivo está adoptando un plan 10b5-1 para proveer una solución de liquidez a largo plazo, para ayudar a proveer la diversificación de la cartera o para proveer fondos para ciertos hitos financieros tales como pagos de matrícula o una compra de vivienda, es importante tomar la decisión Tiempo para asegurar que el plan 10b5-1 se adapte a las necesidades específicas del ejecutivo.

&toro; Determinación de la duración del Plan. No hay limitación en la duración del término del plan 10b5-1; Sin embargo, para minimizar la necesidad de modificaciones, se debe prestar especial atención a la determinación de la duración del término del plan. La probabilidad de que las necesidades de liquidez de un ejecutivo bajo un plan 10b5-1 cambien aumenten con el paso del tiempo. Para minimizar la posible necesidad de una modificación a este respecto, considere limitar la duración del plan a no más de 12 meses. Por el contrario, un plan que termina después de un corto período de tiempo después de la adopción aumenta el potencial de banderas rojas, es decir. Si el plan 10b5-1 se tomó de buena fe o como un medio de manipulación. Para mitigar el escrutinio potencial a este respecto, considere la necesidad de que el plan esté en su lugar no menos de seis meses.

&toro; Establecimiento del número de valores. No hay restricciones sobre el número de valores que pueden estar cubiertos por un plan 10b5-1; El plan puede ser redactado para incluir tan pocos o tantos de los valores de un ejecutivo como sea necesario para implementar la estrategia de liquidez del ejecutivo. Sin embargo, es importante que el ejecutivo encuentre el equilibrio adecuado - muy pocos valores pueden dejar al ejecutivo que necesite modificar el plan para incluir valores adicionales - demasiados valores pueden restringir indebidamente la capacidad del ejecutivo para aprovechar las prácticas comerciales legítimas fuera de El plan.

&toro; Implementación de un período de espera. Como se discutió anteriormente, la defensa afirmativa que ofrece la Regla 10b5-1 (c) sólo está disponible en la medida en que el plan 10b5-1 fue adoptado cuando el ejecutivo no tenía conocimiento de información material, no pública, además de satisfacer los otros requisitos de La defensa afirmativa. En el discurso de la Sra. Thomsen en octubre de 2007, dejó en claro que si un individuo está negociando información privilegiada y usando un plan 10b5-1 para cubrir, la defensa afirmativa no estará disponible. Un comercio que se ejecuta de acuerdo con un plan 10b5-1 un período de tiempo muy corto después de la adopción puede aumentar el riesgo de escrutinio y potencialmente crear la percepción de que el ejecutivo estaba tratando de utilizar el plan 10b5-1 como cobertura para un comercio basado En información material, no pública. La defensa contra esta percepción y el fortalecimiento de la disponibilidad de la defensa afirmativa pueden ser mejorados si transcurre un período de tiempo suficiente entre la adopción del plan y la ejecución de la primera operación en el marco del plan. De la misma manera, maximizar esta brecha puede ayudar a minimizar los retos que el plan 10b5-1 no se introdujo en "buena fe". Mientras que algunos planes 10b5-1 pueden imponer una prohibición de transacciones bajo el plan hasta que se abra la próxima ventana de operaciones, imponer un período mínimo de 30 días es una buena práctica.

&toro; Maximizar la sencillez; Minimice la complejidad. Mientras que un plan 10b5-1 debe ser personalizado para las necesidades específicas de liquidez de un ejecutivo, demasiada complejidad puede ser problemática. Las necesidades de nadie se cumplen efectivamente si el corredor de administración no puede determinar con precisión cómo se deben ejecutar las operaciones bajo un plan 10b5-1. Tanto el ejecutivo como el corredor de administración deben comprender claramente los requisitos de negociación y los mecánicos del plan antes de la adopción del plan. Ningún detalle es demasiado pequeño. Considerar si se han tratado todas las variables del plan 10b5-1, tales como el orden específico en el que se van a vender los valores (por ejemplo, la base impositiva más baja hasta la más alta), el orden en que se deben ejercer las opciones sobre acciones El precio de ejercicio al más alto), si las operaciones no ejecutadas deben ser trasladadas (y si el plazo del plan debe extenderse para acomodar dichas transacciones), y el número máximo de valores a vender en un período dado, entre otros. La mesa de negociación de una firma de corretaje a menudo tiene cientos de planes 10b5-1 que está administrando en un momento dado, pudiendo confiar en una fórmula de transacción simplificada que es automatizada, en lugar de una fórmula compleja que requiere revisión y cálculo continuos por parte de la administración Corredor, ayudará a maximizar la ejecución apropiada de comercios bajo un plan 10b5-1 y minimizar la confusión potencial.

Fortalecimiento de la Defensa Afirmativa

Además de seguir las prácticas descritas anteriormente, existen ciertas medidas que se pueden tomar o evitar para minimizar el escrutinio potencial del plan 10b5-1 del ejecutivo y maximizar la probabilidad de que los requisitos de la defensa afirmativa que ofrece la Regla 10b5-1 ( C) han sido satisfechos.

&toro; Minimizar modificaciones. Un ejecutivo no debe entrar en un plan 10b5-1 con la expectativa de que será posteriormente modificado para atender las necesidades cambiantes del ejecutivo. Las modificaciones a un plan 10b5-1 pueden poner en duda si el ejecutivo adoptó originalmente el plan 10b5-1 de buena fe y puede crear la percepción de que el ejecutivo está manipulando el plan 10b5-1. Por ejemplo, para maximizar las ventas a precios más altos de las acciones, un ejecutivo que modifica los términos del plan para aumentar el número de acciones que se venderán a tales niveles de precios podría ser visto como una manipulación inapropiada del plan 10b5-1. Esto sería especialmente problemático si el ejecutivo tuviera conocimiento, basado en información no pública, de que el emisor iba a publicar información favorable que podría tener un efecto positivo en el precio de las acciones del emisor. Aunque puede haber ciertas circunstancias en las que las enmiendas a un plan 10b5-1 pueden ser necesarias y justificables, las enmiendas sólo deben hacerse en situaciones limitadas y, en general, deben tratarse como una terminación del actual plan 10b5-1 y la adopción de un plan Nuevo plan 10b5-1. La SEC ha indicado previamente que las enmiendas a los planes existentes de 10b5-1 no están prohibidas, siempre y cuando todos los requisitos de la defensa afirmativa puedan ser satisfechos en el momento de la enmienda, incluyendo la ausencia de información material no pública. Al igual que con la adopción de un plan 10b5-1, los términos del plan deben prever un período de espera, nuevamente 30 días es el mejor, antes de que se realice cualquier transacción de acuerdo con un plan 10b5-1 enmendado.

&toro; Limite o elimine las suspensiones del plan. La capacidad de un ejecutivo para suspender un plan 10b5-1 puede plantear muchos de los mismos problemas involucrados con la modificación de un plan 10b5-1. Dependiendo de los términos del plan 10b5-1, en la medida en que se permita a un ejecutivo suspender y reinstituir la negociación bajo el plan a discreción del ejecutivo, parecería improbable que el plan pueda resistir el escrutinio o que los requisitos de la defensa afirmativa (Observe el requisito específico de la defensa afirmativa discutido anteriormente de que los términos del plan 10b5-1 no permitan al ejecutivo ejercer ninguna influencia posterior sobre cómo, cuándo o si las compras o ventas se realizarían bajo el plan). Cuando un ejecutivo tiene derechos limitados para suspender la negociación bajo un plan 10b5-1 (por ejemplo, únicamente debido a restricciones legales como la Regulación M), considere la posibilidad de deshacerse del ejecutivo del derecho a reinstaurar operaciones bajo el plan. Además, cualquier decisión que pueda adoptar el ejecutivo para reinstaurar operaciones con arreglo al plan debe considerarse como una modificación del plan 10b5-1, que requiere la satisfacción de cada elemento de la defensa afirmativa en el momento de la reinstitución del comercio, incluida la ausencia de Material, información no pública. Al igual que las modificaciones, la suspensión del comercio bajo un plan 10b5-1 puede poner en duda si el ejecutivo adoptó originalmente el plan 10b5-1 de buena fe y puede crear la percepción de que el ejecutivo está manipulando la Regla 10b5-1 (c). Por lo tanto, si un plan 10b5-1 debe incluir derechos de suspensión limitados y legítimos, el plan 10b5-1 debe dejar claro que el derecho a suspender sólo es para circunstancias excepcionales específicamente enumeradas.

&toro; Elimine las comunicaciones con el Agente Administrador. Una vez que se adopta el plan 10b5-1, aparte de los avisos de que las operaciones han sido ejecutadas, no debe haber comunicaciones entre el corredor de administración y el ejecutivo. Si las instrucciones de negociación bajo un plan son demasiado complejas o ambiguas, y el corredor de administración y el ejecutivo comunican sobre tales asuntos para aclarar la intención del ejecutivo o los términos del plan, tales discusiones podrían caracterizarse posteriormente como un ejercicio inapropiado de influencia o Discreción sobre el plan 10b5-1 por el ejecutivo. No sólo pueden estas comunicaciones erosionar la capacidad del ejecutivo para satisfacer la defensa afirmativa, pero la desviación de un corredor de los parámetros escritos del plan basado en tales comunicaciones puede ser visto como una modificación del plan 10b5-1.

&toro; Consideraciones relacionadas con el comercio fuera de un plan 10b5-1. Aparte de celebrar o modificar una transacción o posición correspondiente o de cobertura con respecto a los valores cubiertos por el plan 10b5-1, no existen restricciones formales para ejecutar operaciones fuera de un plan 10b5-1. Sin embargo, hay ciertas acciones que, si se toman fuera de un plan 10b5-1, se pueden ver como "consideradas" Modificaciones de un plan 10b5-1. Por ejemplo, si un ejecutivo vende valores o ejerce opciones sobre acciones fuera de un plan 10b5-1 que de otro modo se designarían como valores del plan, tal acción sería seguramente considerada como una modificación del plan 10b5-1, es decir, Los valores ya no están disponibles para que el corredor administrante venda de acuerdo con los términos del plan 10b5-1, el plan 10b5-1 ha sido enmendado efectivamente por el retiro del ejecutivo, De dichos valores. Del mismo modo, si un ejecutivo vende valores fuera de un plan 10b5-1 que tiene el efecto de reducir los límites de volumen disponibles según la Regla 144 aplicable a las ventas de valores del ejecutivo, el plan 10b5-1 puede considerarse modificado en la medida en que la administración El corredor se ve obligado a vender menos títulos de los que de otra manera habría sido requerido por el plan debido a la reducción en el volumen disponible bajo la Regla 144 causada por la venta del ejecutivo. Para evitar estas dos situaciones, el ejecutivo debe tener cuidado de no vender los valores de los planes designados fuera del plan y asegurarse además de que cualquier venta de valores fuera del plan 10b5-1 no afecte adversamente los límites de volumen bajo la Regla 144 al determent De las ventas del plan.

&toro; No mantenga varios planes 10b5-1. Tener planes múltiples 10b5-1 o superpuestos puede aumentar la probabilidad de escrutinio y puede plantear dudas sobre si tales planes se han concertado de buena fe o como un esquema para eludir los requisitos de la Regla 10b5-1. Considere el escenario en el que un ejecutivo adopta dos planes 10b5-1, cada uno con umbrales de límite de órdenes diferentes (un plan tiene umbrales de límite más bajo que el otro). En la medida en que un ejecutivo determine cancelar el plan con los umbrales de límite inferior cuando el precio de las acciones disminuye (para evitar las ventas al precio más bajo) y retener el plan con los umbrales de límite superior (para asegurar que las ventas ocurran en el nivel más alto Precio cuando el precio de las acciones aumenta), sería difícil defender esta práctica como no siendo manipuladora de la Regla 10b5-1. Aunque puede haber una necesidad legítima de que un ejecutivo tenga más de un plan 10b5-1, se debe tener precaución en cuanto a si tal necesidad supera el riesgo potencial. Si un ejecutivo tiene una necesidad legítima de tener más de un plan 10b5-1 en su lugar, todos estos planes deben ser tratados como un plan integrado - tratar la terminación de un plan como la terminación de todos los otros planes, o la modificación de Un plan como una modificación de todos los otros planes, etc.

&toro; Considere el efecto de la terminación de un plan 10b5-1. La SEC ha indicado previamente que la terminación de un plan 10b5-1, aunque tenga conocimiento de información material y no pública, no creará responsabilidad bajo la Regla 10b-5, porque no se ha producido venta o compra - una compra o venta de un valor debe estar presente para Responsabilidad de adjuntar. Sin embargo, la SEC también ha dejado claro que la terminación de un plan 10b5-1 podría afectar la disponibilidad de la defensa afirmativa para las transacciones de plan anteriores si tal terminación cuestiona si el plan 10b5-1 fue originalmente firmado de buena fe y no Como parte de un plan o esquema para eludir la Regla 10b5-1. Como tal, para minimizar el riesgo de escrutinio y la pérdida potencial de la defensa afirmativa para las operaciones de preterminación, aparte de la terminación automática de un plan 10b5-1 según sus términos, un ejecutivo sólo debe terminar un plan 10b5-1 en circunstancias excepcionales. Además, la terminación sistémica de un ejecutivo y la adopción de planes 10b5-1 podrían socavar la capacidad del ejecutivo para establecer que tales planes fueron adoptados de buena fe y podría conducir a preguntas sobre si estas acciones eran realmente sólo un intento de evadir las prohibiciones de la Regla 10b5-1.

Parris es un socio de finanzas corporativas en Morrison & amp; Foerster LLP en la oficina de San Francisco. Su correo electrónico es bparris@mofo. com.

NUEVO "PLAN 10b5-1" AYUDA A RESOLVER EJECUTIVOS

PROBLEMAS DE DIVERSIFICACIÓN

En octubre de 2000 la SEC modificó y actualizó "La Ley de Intercambio de Valores de 1934", un acto para prevenir el fraude comercial, en un esfuerzo por aclarar las ambigüedades de las reglas existentes de información privilegiada. Al hacerlo, también explicó cómo un miembro corporativo puede intercambiar sus acciones sin violar las regulaciones. En virtud de la sección 10b5-1 de la "Securities Exchange Act of 1934", una persona jurídica corporativa puede negociar sus acciones si demuestra que la transacción se realizó como parte de un plan predeterminado y sistemático de comercio que fue establecido antes de que el iniciado tuviera conocimiento de Cualquier "información material, no pública".

Además, las reglas enmendadas describen cómo la sección 10b5-1 podría proporcionar una "defensa afirmativa" contra el litigio de información privilegiada. La SEC no proporciona detalles para establecer estos planes, pero ofreció flexibilidad al identificar ciertos requisitos previos para un "Plan 10b5-1" y "defensa afirmativa". En resumen, deben cumplirse las siguientes condiciones:

En primer lugar, el "Plan 10b5-1" debe establecerse en un momento en que el iniciado no conoce ninguna "información material no pública" y debe ser a través de un tercero, como un asesor, corredor / distribuidor o fiduciario.

S econd, el plan debe predeterminar el número de acciones a negociar, a qué precio de la acción, y en qué fecha. Puede usar fórmulas o un algoritmo, o un programa de computadora para determinar cantidades, precios y fechas.

Una vez que el plan es establecido, el iniciado no puede ejercer ninguna influencia, detener o cambiar el plan. Aunque no existe una duración específica del plan, la mayoría de los planes tienen vigencia por un año y pueden renovarse si se observan las normas de la SEC antes mencionadas. Por supuesto, el consejero o corredor también está prohibido de poseer cualquier "material, información no pública" al ejecutar el comercio.

Un ejemplo simple de un "Plan 10b5-1" podría decir lo siguiente: Vender 10.000 acciones el primer día de cada trimestre, a un precio no inferior a $ 50 por acción. Hay mucha flexibilidad en el diseño del plan, pero todas las reglas deben ser estrictamente seguidas. Si se cumplen estas condiciones, el conocimiento interno de "información material no pública" no es un problema cuando la acción se negocia, incluso si el iniciado se da cuenta de dicha información. Con un "Plan 10b5-1" en efecto, el ejecutivo, director u otro miembro de la corporación podrían comenzar a diversificar sus acciones sin la constante preocupación de violar las reglas de información privilegiada de la SEC.

Además, se puede diseñar un "Plan 10b5-1" para alguien que pueda tener necesidades futuras de liquidez como el financiamiento para la educación de un niño. Además, las empresas que desean recomprar acciones de su empresa durante un período de tiempo también pueden implementar un "Plan 10b5-1". Por ejemplo, una corporación durante períodos de black-out podría emplear una estrategia de "orden limitada" para proteger el precio de las acciones. Esto ayudaría a la corporación a proteger el precio de las acciones durante el período de recompra.

La SEC no requiere que la corporación establezca el "Plan 10b5-1"; Cualquier persona puede establecer un plan. Sin embargo, la mayoría de los asesores están de acuerdo en que sería prudente que un individuo informara y discutiera sus intenciones con la corporación antes de implementar esta estrategia, ya que la corporación podría tener que modificar sus políticas comerciales existentes para permitir el nuevo plan. Como siempre, antes de entrar en cualquier tipo de plan de negociación de valores primero consultar a un abogado de valores bien informado.

Thom F. Carroll es asesor financiero de Carroll, Frank & amp; Plotkin, LLC, un Asesor de Inversiones Registrado, y por separado, un Representante Registrado con Royal Alliance Associates, Inc.

Para obtener más información, llame al 410-323-3600 o 1-888-323-PLAN (7526).

Valores ofrecidos a través de Royal Alliance Associates, Inc. Miembro NASD / SIPC

Thom F. Carroll, CLU es un Representante Registrado de y ofrece productos de valores & amp; Servicios a través de Royal Alliance Associates, Inc. Miembro FINRA / SIPC, un corredor de bolsa registrado. En este sentido, esta comunicación se destina estrictamente a las personas que residen en los estados de Maryland, Delaware, Florida, Nueva York, Pennsylvania, Distrito de Columbia. Virginia y California.

Thom F. Carroll, CLU también se registra por separado como un representante de asesor de inversiones bajo Carroll, Frank & amp; Plotkin, LLC, una inversión registrada adviosr, ofreciendo servicios de asesoramiento en el estado de Maryland. Como tal, estos servicios están estrictamente destinados a personas que residen en Maryland.

INFORMACIÓN IMPORTANTE PARA EL CONSUMIDOR:

Un agente de bolsa "BD", un asesor de inversiones "IA", un agente de BD o un Representante de IA solo pueden realizar transacciones comerciales en un estado si se han inscrito por primera vez en ese estado o están excluidos o exentos del registro en ese estado como intermediario , Asesor de inversiones, agente de BD o representante de IA, según corresponda. Las respuestas individualizadas de seguimiento a las personas en un estado por tal empresa o individuo que implican efectuar o intentar efectuar transacciones en valores, o la prestación de asesoramiento personalizado de inversión para compensación, no se hará sin primero cumplir con los requisitos de registro apropiados, O una exención o exclusión aplicable.

Para obtener información sobre el estado de licencia o antecedentes disciplinarios de un corredor de bolsa, un asesor de inversiones, un agente de BD o un representante de IA, el consumidor debe ponerse en contacto con su administrador de derecho de valores estatal.

Los mejores planes de pago desaparecieron: Prácticas para los planes de negociación de la Regla 10b5-1

Esto también fue publicado en Law360 el 14 de mayo de 2013.

Rule 10b5-1 trading plans are in the limelight due to investigations initiated by U. S. Attorney’s Offices and the SEC into possible abuses by corporate executives of such plans. Now, more than ever, companies and their boards of directors should review and strengthen their insider trading policies concerning Rule 10b5-1 trading plans.

Rule 10b5-1 trading plans are no stranger to controversy. First introduced in 2000 by the Securities and Exchange Commission (SEC), Rule 10b5-1 trading plans permit a corporate insider to adopt a plan of acquisition or disposition of his or her company’s stock when not in possession of material nonpublic information so that trades may be executed by a broker at predetermined times regardless of whether the insider then possesses material nonpublic information.

Now that investigations have been initiated by U. S. Attorney’s Offices and the SEC into possible abuses by corporate executives of such plans, the private securities bar inevitably will follow suit and file litigation. Nevertheless, the plans continue to be an effective affirmative defense against allegations of insider trading. Companies and their boards of directors should review and strengthen their insider trading policies concerning Rule 10b5-1 trading plans. Such measures will raise the likelihood that the plan will be successful as a defense, the company’s insider trading policy will be deemed rigorous by regulators and governmental entities and more favorable directors’ and officers’ (D&O) insurance policy terms and premiums will be available due to a reduced risk profile.

Renewed Interest in Rule 10b5-1 Trading Plans

In November and December of 2012, a series of articles in the Wall Street Journal reported on corporate executives’ use of Rule 10b5-1 trading plans to sell shares of their own company stock. 1 The trades appeared to have drawn the scrutiny of news media and federal prosecutors and securities regulators due to their opportune timing, resulting in highly beneficial sales, just days before the companies’ stock prices plunged. The articles suggest corporate executives may have achieved above-market returns using prearranged corporate-executive trading plans. According to the articles, the U. S. Attorney’s Office for the Southern District of New York and the SEC opened investigations into alleged abuses of such trading plans.

In April 2013, the Journal ran another series of articles on Rule 10b5-1 trading plans, this time, shifting its focus to corporate directors’ use of such plans to sell company shares for investment funds they run. 2 One article reported that federal prosecutors in the Eastern District of New York had launched a criminal investigation, expanding on the investigation previously opened by the SEC and the U. S. Attorney’s Office in the Southern District of New York. The articles highlight the well-timed nature of a few corporate directors’ trades, which allegedly spared their investment funds significant declines in the value of their holdings.

Rule 10b5-1 trading plans have long been the subject of debate. 3 The recent wave of renewed interest by federal prosecutors and securities regulators in such plans suggests that companies and their directors review their insider trading policies to evaluate compliance and to consider best practices.

Rule 10b5-1 Trading Plans: The Basics

In 2000, the SEC adopted Rule 10b5-1 to clarify “what, if any, causal connection must be shown between the trader’s possession of inside information and his or her trading.” It provides that a trade is made “on the basis of” material nonpublic information “if the person making the purchase or sale was aware of the material nonpublic information when the person made the purchase or sale.”

The Rule provides officers, directors and other insiders an affirmative defense to allegations of insider trading when, prior to becoming aware of material nonpublic information . the person entered into a binding contract to purchase or sell the security, instructed another person to purchase or sell the security for the instructing person’s account, or adopted a written plan for trading securities. The contract, instruction, or plan must (a) specify the amount and price of securities to be purchased or sold as well as the date on which the purchase or sale is to be made (or include a written formula for determining such information) and (b) not permit the insider to exert influence over how, when, or whether to trade after entering into the plan.

For example, three months before the first scheduled trade, a director could adopt a plan that called for her broker to sell 10,000 securities of Company A on March 15, July 15 and November 15 every year so long as the sale could be completed for a minimum of $20 per share. If sales occurred on those dates, the director should be able to raise a Rule 10b5-1 affirmative defense against an allegation of insider trading with respect to those sales. However, if the director altered or deviated from the plan such as by selling 20,000 shares of Company A for $15 per share on March 5, the resulting sale would not be considered to be made pursuant to the plan and the affirmative defense would be unavailable.

Tips for Your Company’s Rule 10b5-1 Trading Plan Policy and Plan Guidelines

In light of the current investigations underway concerning potential insider trading and Rule 10b5-1 trading plans, companies and their directors should strengthen their insider trading policies addressing these plans and consider adopting guidelines for trading plans. In particular, companies should consider the following in order to maximize the protections of Rule 10b5-1 when companies and individuals are faced with allegations of insider trading.

Oversight of Trading Plans as Part of Company’s Compliance Program: Qualified legal and compliance personnel should preapprove the insider’s entry into a Rule 10b5-1 trading plan and review proposed modifications to established plans. This review is part of the company’s obligation to maintain a robust compliance program to detect and deter improper conduct, including insider trading. The company should develop preapproved plan guidelines for use by insiders.

Institute a Waiting Period: Rule 10b5-1 does not impose a waiting period from the time of the plan’s adoption to the first trade executed under it. Nevertheless, requiring a reasonable waiting period of 30 to 90 days (the longer the better), or expressly providing that no trades may occur until the next open window, would be helpful in strengthening a Rule 10b5-1 defense and avoiding suspicion of a trade made under the plan. 4

Restrict Timing for Adoption of Plans: A Rule 10b5-1 trading plan must be adopted at a time when the insider was not aware of material nonpublic information. Companies should consider restricting the time for adoption of such plans to “open window” periods under the company’s insider trading policy. Such a limitation would dispel the potential negative inference that may arise if a plan was adopted outside the company’s trading window. 5 Companies should prohibit modifications of plans once adopted.

Preapproval for Cancellation of Plans: Rule 10b5-1 does not establish a minimum duration period for plans or otherwise address the timing for cancellation of a plan established thereunder. However, cancellation or modification (if not prohibited) of a plan could affect the availability of the Rule 10b5-1 defense. 6 Companies should additionally consider whether to restrict plan terminations to open window periods. Therefore, companies’ qualified legal and compliance personnel should review and preapprove any proposed cancellation.

Discourage Suspension or Cancellation of Plans: If an insider suspends (if modifications are permitted) or cancels a plan after the first option exercise or stock sale, companies should consider requiring the insider to terminate all outstanding trading plans and agree not to enter into another prearranged trading plan for a specified period (for instance, six months) after such termination.

Require Plans to Be Put in Place for a Reasonable Period of Time: Companies should consider establishing a minimum duration period for prearranged trading plans. Any such requirement should be subject to limited exceptions for legitimate exigencies. Although Rule 10b5-1 does not require plans to be in existence for a specific period of time, establishing a minimum duration period may ward off skepticism that the plan was established in bad faith.

Discourage Multiple Plans: The use of multiple, overlapping plans is not prohibited by the Rule. But the existence of overlapping plans may cast doubt on whether the plans were adopted in good faith, particularly where a second plan could affect trades of the same securities covered by the first plan .7 This concern should not apply where multiple plans are used to sell shares to pay withholding taxes on the vesting of separate grants of restricted stock, because these plans would cover separately identifiable shares.

Restriction on Significant Sales: Large sales of securities may draw scrutiny and undermine the effectiveness of a Rule 10b5-1 affirmative defense. Companies should consider imposing a volume restriction on sales made under Rule 10b5-1 trading plans, taking into account any volume restrictions imposed by Rule 144.

Automatic Termination or Suspension of Plan Upon Occurrence of Specified Events: The Rule 10b5-1 trading plan should provide for automatic termination upon the occurrence of personal events, such as death, bankruptcy and termination of employment, and corporate events, such as mergers, acquisitions or securities offerings. In addition, Rule 10b5-1 trading plans should be suspended or terminable by the company upon the occurrence of a corporate event that would cause a prearranged transaction to violate the law or to have an adverse effect on the company, the trading plan must be revoked.

Keep It Simple: Companies should make sure Rule 10b5-1 trading plans provide adequate instructions for the broker to implement the plan, keeping in mind that a simple plan is best. The plan should clearly describe the number of shares to be sold or purchased on specified days. Avoid ambiguity and complexity.

Voluntary Disclosure: The adoption, amendment or termination of a Rule 10b5-1 trading plan is not required to be publicly disclosed. Nevertheless, companies should consider voluntary disclosure as a good faith effort to be transparent and to ward off public scrutiny. Such disclosures should merely identify that a Rule 10b5-1 trading plan has been adopted or terminated by a particular corporate insider, and should not include the plan’s details.

Form 4 Filings Should Indicate That Trades Were Made Pursuant to a Trading Plan: The Rule 10b5-1 trading plan must state how the insider should notify the company of trades in a timely manner since insiders must file a Form 4 reporting all transactions in company stock within two business days. Where relevant, the Form 4 filing should indicate that the trades were made under a Rule 10b5-1 trading plan. Companies should consider the effect that frequent trades under a plan would have on Form 4 filings and encourage insiders to plan accordingly.

In light of the increased media attention paid to Rule 10b5-1 trading plans and the resulting regulatory and governmental investigations, it is not far-fetched to believe that the plaintiff’s securities bar will not be too far behind. Carefully crafted Rule 10b5-1 trading plans can be an effective tool to rebut allegations of insider trading in securities fraud class actions as well as in regulatory or governmental investigations or proceedings. Adoption and maintenance of robust insider trading policies and drafting guidelines concerning such plans also are important to demonstrate to regulators and governmental entities that a company has taken all reasonable steps to put effective compliance measures in place to detect and deter insider trading. In addition, a company’s adoption of rigorous insider trading programs and plan guidelines may be useful in demonstrating to prospective D&O insurers during the underwriting process that a company’s risk profile is relatively low, resulting in more favorable coverage terms and lower premiums. For all these reasons, companies and their boards should review their current policies concerning trading plans and strengthen them if necessary to best defend themselves from potential litigation and investigations and best position themselves for favorable D&O insurance coverage opportunities.

Susan Pulliam & Rob Barry, Executives’ Good Luck in Trading Own Stock . Wall St. J. Nov. 27, 2012; Susan Pulliam, Jean Eaglesham, & Rob Barry, Insider-Trading Probe Widens, U. S. Launches Criminal Investigation Into Stock Sales by Company Executives . Wall St. J. Dec. 11, 2012; Jean Eaglesham & Rob Barry, Trading Plans Under Fire, Despite 2007 Warning, Experts Say Loopholes Remain for Corporate Insiders . Wall St. J. Dec. 14, 2012.

Susan Pulliam & Rob Barry, Directors Take Shelter in Trading Plans . Wall St. J. Apr. 24, 2013; Susan Pulliam, Rob Barry, & Scott Patterson, Insider-Trading Probe Trains Lens on Boards . Wall St. J. Apr. 30, 2013.

See, e. g., Alan D. Jagolinzer, Do Insiders Trade Strategically Within the SEC Rule 10b5-1 Safe Harbor? (Stanford Univ. Graduate Sch. of Bus. Working Paper, Dec. 2006), available at http://www. thecorporatecounsel. net/HotTopics2007/materials/docs/FAQ/12_06_Jago. pdf .

In re Novatel Wireless Sec. Litig., 830 F. Supp. 2d 996, 1025 (S. D. Cal. 2011) (denying defendants’ motion for summary judgment, and finding “Souissi’s use of 10b5-1 was particularly questionable because he sold 110,000 shares the day after entering his 10b5-1 plan, for proceeds of over $2.2 million.”).

Véase, p. In re Countrywide Fin. Corp. Derivative Litig., 554 F. Supp. 2d 1044, 1068-69 (C. D. Cal. 2008) (finding defendant’s “amendments of 10b5-1 plans at the height of the market does not support the inference that the sales were pre-scheduled and not suspicious”).

SEC Exchange Act Rules, Questions and Answers of General Applicability (Feb. 13, 2012), available at http://www. sec. gov/divisions/corpfin/guidance/exchangeactrules-interps. htm (Interpretation 120.18).

See SEC v. Mozilo, No. 09-3994, Docket No. 1 §§ 114-124 (C. D. Cal. filed June 4, 2009) (highlighting multiple trading plans entered into by defendant in three-month period).

by Boris Feldman*

The Securities & Exchange Commission recently created a new safe harbor for stock trades by company insiders. The safe harbor is an affirmative defense to SEC Rule 10b5-1. The SEC staff has provided a helpful commentary on the new provisions. This FAQ addresses practical implementation issues.

What is the purpose of the new Rule?

The overall purpose of Rule 10b5-1 is to make it easier for the SEC to enforce the prohibitions on insider trading against persons who trade while in possession of material nonpublic information. At the same time, the SEC created an affirmative defense to enable insiders to trade so long as they did so pursuant to a plan created prior to the time they acquired the material information. In simple terms, if you sell stock pursuant to a properly established plan, you will not be liable for insider trading even if you became aware of material information subsequent to the time you established the plan and before your trade occurred.

To whom does the defense apply?

The trading safe harbor is available to anyone who trades pursuant to a proper plan: employees of the company; outsiders who may learn of material nonpublic information about the company; and the company itself.

What qualifies as a plan?

The regulation contemplates three types of written plans, any of which is sufficient to invoke the safe harbor protection: (i) a document specifying that particular trades will occur at specified prices, on specified dates, for specified numbers of shares; (ii) a document specifying a formula pursuant to which trades will occur; or (iii) a document granting an outsider complete discretion to make the trades, without access to any material nonpublic information about the company.

How specific does the plan have to be?

It depends on the type of plan. The simplest plan must be very specific with respect to date, volume, and price: "I will sell 5,000 shares on October 23, 2000 at $15 per share." The "trading model" plan must specify the formula or algorithm to be used in making the trades: "On the twentieth day of every quarter, I will sell sufficient shares at the market price that day to yield $25,000 in proceeds." The "delegation" plan can be relatively general: "I direct Jane Broker to sell up to 50,000 shares of stock over the next year at such times, in such amounts, and at such prices as she deems appropriate." Although the commentary does not specifically address the situation, it is likely that one can combine the second and third models: "I direct Jane Broker to sell 10,000 shares each quarter, so long as the price is at least as high as the 52-week rolling average."

Can my trade go forward if I learn adverse information after adopting the plan but before the trade occurs?

Sí. So long as you established the plan before you knew the adverse information, you can go forward with the trade even if you learn of that information before you execute the plan. For example, you adopt a plan on January 1 that provides for a sale of 10,000 shares during the sixth week of every quarter, commencing in May. In late April, you learn that the Company is not on track to meet its targets for the June quarter. The trades scheduled for May under the plan may go forward. Of course, you may not alter the plan to increase the number of shares to be traded once you know the adverse information.

How can I establish a plan?

Regardless of which type of plan you choose, you should put it in writing and give a copy to the trading compliance officer at your company. Ideally, adopt the plan some time before the actual trades will occur; the longer the time that elapses, the less likely you are to be accused of having access to the nonpublic information when you formulated the plan. Senior executives might, for example, adopt a plan pursuant to which trades would not begin until after the results of the current quarter have been announced.

May I change or terminate the plan?

The more you fiddle with the plan, the greater the likelihood that it will be viewed as a sham. If you expect to be adjusting the formula frequently, the safe harbor approach may not be right for you. If you decide to terminate the plan, then a subsequent adoption of a new plan could undermine the value of the defense. The most secure plans will be those with a longer (perhaps fixed) duration that you do not fine-tune along the way. Any changes that you do make will be less vulnerable if they take effect one quarter in the future.

May I sell stock outside the plan?

Literally, yes. But don’t. Such stock sales would not receive the protection of the plan under the Rule 10b5-1 defense. More important, the existence of parallel selling models – those under the plan and those outside it – could give rise to suspicions that the plan was part of a scheme.

How does this provision affect trading windows and blackouts?

Trading windows and blackout periods are a matter of company policy, not federal law. I expect that many companies will modify their internal trading windows to provide that they do not apply to trades made pursuant to a proper plan. In that case, you can schedule trades within the plan at any time during a quarter, regardless of whether or not the window is open for discretionary trades. As a matter of personal preference (and external appearance), I think that the earlier in a quarter (following the earnings release) that trades occur, the better. That way, even if there is a problem with your plan, the odds are lower that you were in possession of material information.

What happens if I violate the plan?

At minimum, selling stock in violation of the plan terms will deprive the trades of the safe harbor protection. The SEC (or private plaintiffs) might also point to the violation as evidence of fraudulent intent on your part. Violation might also subject you to sanctions by your company.

Should I disclose the plan externally?

Public disclosure is not required. In my opinion, officers or directors of public companies would be well-served by disclosing the existence of the plan (though not its precise terms) in shareholder documents. This would minimize the inferences that the market might draw from the timing of particular stock sales by insiders. Disclosure could also be useful in securities litigation to dispel any inferences of misconduct based on the trading.

Would a plan help me in a shareholder class action?

Sí. In shareholder class actions, a key element of plaintiffs’ case is that stock sales by insiders in advance of the negative disclosures provide the motive for the alleged fraud. I believe that courts will apply the Rule 10b5-1 defense to overcome any such inferences where the sales occurred pursuant to a proper plan.

Are there advantages to selling through a formal blind trust instead of just a plan?

I have encouraged clients for years to dispose of their stock through blind trusts. Executive Stock Sales and Securities Class Actions: The Blind Trust Approach. Few have been willing to do so, in part because of the perceived hassles of setting up the trust. Rule 10b5-1 validates this approach and makes it much simpler: for most employees, a plan will provide ample protection. It remains my view that for executives with very large blocs of stock to sell, or with very complicated plans, the added formality of a blind trust may provide enhanced protection, particularly in shareholder lawsuits. Indeed, in the commentary accompanying proposed Rule 10b5-1, the staff stated: "We have not included any express defenses for blind trust trading, because we do not believe this trading creates difficulties under existing insider trading law. When a person places securities in a blind trust, by definition he or she does not make the decisions to purchase or sell securities in that account. Therefore, those trading decisions (which are made by the trustee of the blind trust) should not be attributed to the person for purposes of potential insider trading liability." Proposed Rule: Selective Disclosure and Insider Trading, Releases Nos. 33-7787, 34-42259, etc. (Dec. 20, 1999) (Internet copy), n.91.

Can the SEC still come after me if I trade pursuant to a plan?

Sí. The safe harbor is an affirmative defense, not an element of the SEC’s insider trading claim. The SEC can overcome the defense if it shows that plan was actually part of an insider-trading scheme. As noted above, the longer the elapsed time between adoption of the plan and commencement of trading, the tougher this showing will be for the SEC.

Does the safe harbor apply to trades by the corporation itself?

Sí. The regulation expressly provides that the issuer may establish a repurchase plan that receives the Rule 10b5-1 protections. Note that a standard corporate announcement that the company may repurchase up to x million shares does not constitute a sufficiently specific plan to invoke the safe harbor. In addition, a company may set up internal walls that enable an employee without access to material nonpublic information to engage in repurchases for the company, even though other employees know of such information at the time.

*Copyright 2000. Boris Feldman is a member of Wilson Sonsini Goodrich & Rosati. in Palo Alto. This article reflects his views, not his firm’s. Revised October 13, 2000.

Insider Selling Isn't Always A Bad Sign

Insiders at public companies essentially have two options for buying and/or selling their companies' stock. The first is to conduct the transactions in the open market. That is, they can buy or sell securities through a broker just like any other retail investor. The second option is to conduct the transaction on a systematic basis through what is called a 10b5-1 plan. This Securities and Exchange Commission (SEC) rule permits a systematic form of insider trading that is not only legal, but can also be beneficial for both the insiders (and their companies) and individual investors. Siga leyendo para obtener más información.

What is a 10b5-1 plan?

Rule 10b5 is one of the most important acts put forth by the SEC. This rule makes it unlawful to defraud, mislead or operate in any fraudulent manner in transactions of securities on national exchanges.

This rule was also enacted to prohibit the purchase or sale of a security on the basis of non-public information. Any trade made with material non-public information, or insider information, is deemed as insider trading and is illegal under Rule 10b5.

In 2000, the SEC made an administrative ruling, known as 10b5-1, or 10b5-1 (c), which allows for a defense against the insider trading rule as long as the individual can determine that no non-material insider information was used as the basis for the trade.

This ruling created a situation where insiders could create a trading plan in advance of a trade if they set a specific date or price at which to effect a transaction (either a purchase or a sale). When that event transpired, it triggered the trade. These trading plans are known as 10b5-1 plans.

For example, executives may want to purchase shares throughout the calendar year. To do so, they (under the plan) purchase a fixed number of shares at specified dates, such as the first trading day of the month. The transaction is automatic. The insider will be safe even if he or she has insider information at the time of the sale, as long as the plan was set up when no material non-public information was known.

Conversely, if an insider wants to diversify his or her holdings but doesn't want to sell a large portion of stock at any one time for fear that it might send the wrong message to the investment community, the individual may set up a plan that liquidates 1,000 shares per month over the next year. Again, the trades are automatic and take place at a set point in time.

Benefits for Insiders

There are several benefits of 10b5-1s for both insiders and individual investors:

A Better Appearance

Because a 10b5-1 is a pre-set systematic method of accumulating and/or disposing of shares, the possession of insider information becomes essentially irrelevant. By definition, this will help stem accusations of insider trading and/or front running after a trade is consummated. In short, for executives at high profile companies that are frequently the target of shareholder suits and almost always subject to scrutiny from the investment community, this system can be invaluable.

Windows and Blackout Periods Don't Matter

Many - if not most - companies have established trading windows, or time periods when an individual executive may conduct a transaction in the stock. Many companies have also established blackout periods where, during a certain time period, absolutely no transactions in the company stock may be effectuated.

However, a 10b5-1 renders both of these strategies moot. That's because the trades are systematic and take place regardless of whether the individual has inside information or the company is about to report good or bad news.

Eliminates the Need to Read Into Insider Data

When an insider buys or sells stock on the open market, the law states that the company/insider must make the trade details public. When this data is reported to the SEC, major news wires and/or market data providers will then disseminate it widely to their readership or client base (particularly if the transaction was effectuated by an individual at a well-known company). Furthermore, in many instances the data may also be interpreted and used by journalists in their articles.

Unfortunately, when data is released in this manner it is sometimes wrongly interpreted. In other words, when an insider sells his or her stock. some may interpret the transaction as though he or she no longer stands behind the company, when in fact the transaction may represent only a small portion of the individual's assets.

Conversely, small insider purchases are sometimes construed as an indicator that the current price offers a terrific buying opportunity, when in fact the insider intends to make purchases in the future at numerous prices.

The Benefits for Investors

Limits Incorrect Interpretations and Makes Intentions Known

Insider data is sometimes wrongly interpreted by individual investors and/or large institutional shareholders. which can lead to mass selling or mass buying. However, when an executive consistently buys or sells shares each month (or quarter, or at some other pre-established period), the investment community becomes aware of the plan and will not typically react with such blind emotion.

Also, when an insider sells stock on the open market, investors typically look just at the transaction. They tend to ignore other characteristics of the trade and/or evidence of why the insider may have initiated the purchase or sale.

For example, if an insider sells 5,000 shares of XYZ stock, the only thing that most investors will hear or see is the date the stock was sold, who sold it and at what price. But they won't know, for example, whether the sale of 5,000 shares makes up only a tiny portion of what the executive continues to hold and believe in.

When a systematic plan is in place, investors will be able to see the insider's intentions more clearly. For example, when certain insiders liquidate shares at consistent points throughout the year, investors are more apt to be aware of and understand that an insider is simply diversifying his or her holdings, and that the remaining sizable position in the stock implies confidence in the company.

Investors Know What to Expect and When to Expect It

Part of the problem with insider data reporting is the time it takes for such information to reach the average investor. While the SEC mandates that Form 4 (filings that must be made when changes in ownership occur) must be filed within two business days of a trade, it sometimes takes a week or more for that data to circulate to the average shareholder through news services or some other data provider.

Data/trade information may also come to investors at an inopportune time - like on a Friday afternoon when many traders like to go home "flat " (or without any long positions). When this happens, it could exacerbate the normal selling. That said, when a systematic plan is used investors know, or should expect to see, sales (or purchases) at given points in time. This is comforting to many shareholders.

Línea de fondo

Systematic investment plans are much more beneficial for both insiders and individual investors than transactions effectuated on the open market. A 10b5-1 plan allows executives to diversify their holdings without creating a stir in the investment community, and allows investors to keep an eye on executives' sales of shares.

Rule 10b5-1 Trading Plans in the Current Environment: The Importance of Doing it Right

Craig M. Scheer

About the Authors:

Craig M. Scheer is a partner at Silver, Freedman & Taff, L. L.P. in Washington, D. C.

Rule 10b5-1 under the Securities Exchange Act of 1934 allows officers, directors and other insiders of public companies to purchase and sell their company's stock while they are in possession of material non-public information, provided that the transaction is made pursuant to a trading plan previously established at a time when the insider was not aware of material non-public information. Critics have long viewed the rule as creating an opportunity for abuse, claiming that some insiders may in fact be aware of material non-public information at the time plans are established and that the rule can be used to provide cover for improper trades. The critics' voices have grown much louder recently, due to a series of Wall Street Journal articles published in late 2012 that highlighted suspiciously fortuitous trading patterns under Rule 10b5-1 plans adopted by insiders at certain companies. Several of these insiders are now reportedly being investigated by the Securities and Exchange Commission (SEC) and federal prosecutors.

Although Rule 10b5-1 trading plans may be in the enforcement spotlight, when properly designed and administered, they remain a generally safe and effective way for insiders to purchase and sell securities without concern for insider trading liability. Set forth below is a brief background of Rule 10b5-1, followed by suggestions on the implementation and administration of trading plans in the current environment.

Rule 10b5-1 was adopted by the SEC in 2000 (the adopting release is available at www. sec. gov/rules/final/33-7881.htm ) in order to address the previously unsettled issue in insider trading law of whether insider trading liability requires proof that the insider "used" material non-public information in connection with a purchase or sale of a security, or whether the insider need only have "knowingly possessed" such information at the time of the transaction. Rule 10b5-1 addresses this issue by providing that "a purchase or sale. is 'on the basis of' material non-public information. if the person making the purchase or sale was aware of the. information when the person made the purchase or sale." In other words, knowing possession may be sufficient for insider trading liability to be found.

Rule 10b5-1 also established an affirmative defense which, if the following three conditions are satisfied, will result in the insider being deemed not to have traded "on the basis of" material non-public information, even if the insider was aware of material non-public information at the time of the purchase or sale:

First, before becoming aware of material non-public information, the insider must enter into a binding contract to purchase or sell the security, instruct another person to purchase or sell the security for the insider, or adopt a written trading plan. For the sake of simplicity, a contract, instruction, or plan is referred to in this article as a "plan."

Second, the plan must:

specify the amount of securities to be purchased or sold, and the price(s) at which and the date(s) on which the securities are to be purchased or sold;

include a written formula or algorithm, or computer program, for determining the amounts, prices, and trade dates; o

not permit the insider to exercise any subsequent influence over how, when, or whether to effect purchases or sales, and any other person who does exercise such influence (such as the insider's broker) must not be aware of the material non-public information when doing so.

Third, the purchase or sale in question must actually occur pursuant to the plan and not deviate from it.

The plan must have been entered into in good faith and not as part of a plan or scheme to evade the insider trading laws.

Suggestions on Adoption and Administration of Trading Plans

Confirm that the company's insider trading policy permits Rule 10b5-1 trading plans and obtain any necessary company approvals. Before a Rule 10b5-1 trading plan is established for a company's insider, it must first be confirmed that the company's insider trading policy permits Rule 10b5-1 trading plans. The insider also must obtain any approvals of the plan required under the insider trading policy, such as a sign-off by the company's general counsel.

Assess whether the contemplated trades are right for a Rule 10b5-1 trading plan. If the insider wants to purchase or sell relatively small amounts of shares at regular intervals over an extended period of time, then a Rule 10b5-1 trading plan would likely make sense. Such trading under a Rule 10b5-1 trading plan does not usually arouse suspicion that the insider was aware of material non-public information at the time the plan was adopted. Rule 10b5-1 trading plans also can be useful where the insider knows well in advance that he or she will need to sell shares at a particular time or times in order to generate cash - for example, to pay a child's college tuition prior to the start of a semester or to pay the exercise price and taxes for expiring stock options by selling a portion of the option shares.

If the insider wants to make a single trade or a small number of trades over a short period of time, it generally would be better to do so during an open trading window under the company's insider trading policy. Most companies open the trading window shortly after the public release of earnings and close it near or at the end of each quarter. Sometimes the window must close prematurely or not be opened at all even after the public release of earnings, if another potentially material event is on the horizon (such as a possible merger or acquisition). In addition, if the insider is aware of material non-public information (even if the issuer's trading window is not closed), the insider would be prohibited from purchasing or selling securities until such information is publicly disclosed or no longer relevant.

Put it in writing. Although Rule 10b5-1 technically permits trades to occur pursuant to oral contracts or instructions, best practice would be to put all such plans in writing.

Mantenlo simple. The method of determining the number of shares to be purchased or sold can be as simple or as complex as desired. Of paramount importance is that both the insider and the executing broker clearly understand how the formula is intended to operate. Avoid adopting plans that are extremely complex or that cannot be easily understood by a third party reviewing the plan after the fact, as the SEC or a federal prosecutor could claim that the complexities or ambiguities of the plan do not satisfy the requirements of Rule 10b5-1.

No subsequent influence over trades. Any subsequent influence by the insider over a decision to purchase or sell securities could eliminate the protections of the rule. The trading plan itself should specifically prohibit the insider from exerting such influence. While not required by Rule 10b5-1, as an additional safeguard, it may be prudent for an insider to specify that an independent third party, rather than the insider's regular broker (for example, a separate department within the brokerage firm) handle all trades under the Rule 10b5-1 trading plan, and that the broker establish and maintain a separate account for plan transactions. If the insider's regular broker is used, extensive communications by the insider with the broker, even those relating to other securities holdings in the insider's account, could raise questions as to whether the insider exerted subsequent influence over the execution of the plan transactions.

Waiting period before first trade. Insiders should only be permitted to adopt Rule 10b5-1 trading plans during an open trading window under the company's insider trading policy. This will help to establish that the insider was not aware of material non-public information at the time the plan was adopted. In addition, the plan should contain a reasonable "cooling off" period after adoption (perhaps 30-60 days) during which trades will not occur. The occurrence of purchases or sales shortly after the adoption of a plan could raise questions as to whether the insider was aware of material non-public information when the plan was adopted.

Amending plans. The SEC has indicated that a trading plan may be modified so long as the modification is made in good faith and at a time when the insider is not aware of material non-public information. The altered plan is deemed to be a new plan for purposes of Rule 10b5-1. As with the initial adoption of a plan, modifications to a plan should only be made during an open trading window under the company's insider trading policy and the effectiveness of the modification should be delayed for a reasonable period of time. Insiders should also avoid frequent modifications, as these may lead the SEC or a federal prosecutor to question whether the plan was entered into in good faith and not as part of a plan or scheme to evade the insider trading laws.

Terminating plans. Early termination of a plan by the insider is permissible, even, according to the SEC, when the insider is in possession of material non-public information. The SEC has cautioned, however, that early termination at a time when the insider is aware of material non-public information can result in a loss of the Rule 10b5-1 affirmative defense for prior transactions if the termination calls into question whether the insider originally entered into the plan in good faith and not as part of a scheme to evade the insider trading laws. Repeat adoptions and early terminations of Rule 10b5-1 trading plans will likely raise doubts as to the good faith of the insider and therefore should be avoided. For this reason, the plan should provide for termination upon the occurrence of any one or more of several specified events, such as the purchase or sale of a maximum number of shares, the completion of a merger or similar transaction, the death or disability of the insider and the occurrence of a specified date (typically one to two years after adoption). Be sure that the plan broker is aware of these provisions so that trading does not occur beyond the expiration date, which would leave the insider without the protections of Rule 10b5-1.

Discourage trading outside of adopted plans. Rule 10b5-1 does not prohibit a person who establishes a trading plan under the rule from trading outside of the plan, though it does prohibit non-plan, corresponding, or hedging transactions or positions with respect to the company's stock. Non-plan trading will not be covered by the rule's affirmative defense, however, and must not occur at a time when the insider is aware of material non-public information. Once a trading plan is in place, non-plan trading should be kept to a minimum or avoided altogether, as parallel trading could be viewed with suspicion. For example, in the case of a Rule 10b5-1 trading plan to sell securities, the SEC or a federal prosecutor challenging non-plan sales by the insider might argue that because the insider already had a trading plan, presumably to diversify the insider's investment portfolio, the insider was seeking to take advantage of material non-public information in making the non-plan sales.

Avoid multiple plans. While Rule 10b5-1 does not prohibit an insider from having multiple trading plans with the same company, doing so could be problematic. At a minimum, it may create confusion and cause administrative headaches for the insider, the insider's broker(s) and the company. Of greater concern is that maintaining multiple plans with different trading schedules and pricing parameters may lead to accusations that the insider is engaged in manipulative behavior and trying somehow to evade the requirements of Rule 10b5-1.

Allow for necessary suspensions. A Rule 10b5-1 trading plan should allow for the suspension of trading activity during periods when the insider should not be trading, such as any specific blackout periods under the SEC's rules (for example, Regulation M, which generally prohibits a company's directors and executive officers from purchasing the company's securities during specified time periods when the company is making a public offering of securities) and lockup periods that may be imposed by underwriters in connection with offerings of the company's securities, which generally prohibit insiders from selling company securities soon after the completion of an offering. (Underwriters sometimes agree to exempt previously established Rule 10b5-1 trading plans from lockup agreements.)

Determine how much to disclose regarding plans. Under current SEC rules, neither the insider nor the insider's company is required to make any public disclosures of a Rule 10b5-1 trading plan. If the insider is subject to Section 16 of the Securities Exchange Act of 1934, then at a minimum the Form 4 filed to report the insider's trade (due within two business days after the trade date) should indicate by footnote that the transaction occurred pursuant to a Rule 10b5-1 trading plan established prior to the trade date. An announcement by the company of the plan shortly after the plan's adoption also might quell suspicions over the timing of plan trades. Any such announcement should disclose the date the plan was adopted and the number of shares involved. Disclosing additional details, such as the plan trading schedule and pricing parameters, generally should be avoided. If a company chooses to announce an insider's Rule 10b5-1 trading plan, then any modifications to the plan relating to information previously disclosed (for example, the number of shares to be purchased or sold) also should be disclosed, as should a decision by the insider to terminate his or her plan early.

Changes Afoot?

While companies currently have the flexibility to disclose as much or as little as they want to with respect to their insiders' Rule 10b5-1 trading plans, the resurgence of criticism surrounding Rule 10b5-1 may soon change this. There is now a push by some in the investment community for the SEC to impose specific disclosure requirements for Rule 10b5-1 trading plans, as well as other restrictions on how trading plans are administered. For example, on December 28, 2012, the Council of Institutional Investors (CII), a pension fund trade association, wrote to the SEC (available at www. sec. gov/rules/petitions/2013/petn4-658.pdf ) urging the adoption of interpretive guidance or amendments to Rule 10b5-1 that would permit Rule 10b5-1 trading plans to be adopted only during open trading windows under a company's insider trading policy, prohibit multiple, overlapping Rule 10b5-1 trading plans, prohibit trades from occurring for at least three months after the adoption of a Rule 10b5-1 trading plan, and prohibit frequent modifications or terminations of Rule 10b5-1 trading plans. CII also is calling for a requirement to immediately disclose the adoption, modification, or termination of any Rule 10b5-1 trading plan and for the imposition of direct responsibility for the oversight of Rule 10b5-1 trading plans on boards of directors.

Regardless of whether any of the proposed reforms to Rule 10b5-1 are implemented, the SEC and federal prosecutors remain as interested as ever in combating illegal insider trading. When used improperly, Rule 10b5-1 trading plans can increase an insider's liability risk, such as where trades occur too soon after the adoption of a plan, where plans are repeatedly adopted and terminated or where the insider supplements a plan with non-plan trades, each of which may suggest that the insider attempted to take advantage of material non-public information. But when structured and administered properly, Rule 10b5-1 trading plans can provide a safe and effective way for insiders to trade.

Recursos adicionales

Section 16(b) And Your 10b5-1 Trading Plan

by Robert W. Brownlie and Kellin M. Chatfield

You are director or officer of a public corporation. You have a 10b5-1 Trading Plan in place. As long as you purchase and sell your corporation’s stock strictly pursuant to that plan, you don’t have to worry about the securities laws, right? Incorrecto. Even with a 10b5-1 trading plan in place, a corporate insider’s trades may be subject to regulatory scrutiny and claims from investors. In particular, corporate insiders using 10b5-1 plans to make both purchases and sales could be exposing themselves to liability under Section 16(b) of the Exchange Act for short-swing transactions.

Section 16(b) of the Exchange Act imposes strict liability on corporate insiders who profit from purchases and sales of company stock within a six-month period. Section 16(b) applies to: (1) directors; (2) officers; and (3) beneficial owners of more than 10% of any class of security of the corporation.[2] It covers purchases, sales, and security-based swap agreements concerning the corporation’s securities.[3] If anyone subject to Section 16(b) makes a profit on transactions in the corporation’s stock that take place within 6 months of one another, his or her profits are recoverable by the corporation.

How does this impact your 10b5-1 plan?

Many 10b5-1 plans provide for purchases as well as sales of the corporation’s stock. Or, a director or officer may institute two separate plans, one for selling and one for purchasing the corporation’s stock. This could just be sound investment strategy. It could also mitigate an inference of scienter in a subsequent securities class action, where a director or officer’s sales of company stock, without intervening purchases, may be considered evidence the director or officer was aware of negative information which should have been disclosed to the public. Routine purchases of the corporation’s stock may alleviate any such negative inference.

Unfortunately, these automatic trades pursuant to a pre-set plan do not exempt directors and officers from Section 16(b) and an insider may still be liable for short-swing profits from automatic sales and purchases under a 10b5-1 plan.

Por ejemplo . Director A has a 10b5-1 plan in place which directs its investment manager to sell 1,000 shares of Director A’s stock whenever the stock price rises above $25/share and to buy 1,000 shares of company stock whenever the prices drops below $20/share. The stock price hits $26 a share on January 1. The plan would automatically sell 1000 shares for a total of $26000 on January 1. Suppose then that the price of the Company stock drops to $19 a share on May 15; the plan would automatically purchase 1000 shares for $19,000. Director A would have achieved a short-swing profit of $7000. This amount is subject to disgorgement and payable to the Company under Section 16(b).

This disgorgement is required even though Director A did not make a conscious decision to trade within the 6-month period. Section 16(b) imposes strict liability on any transactions considered “voluntary,” whether or not the director or officer intended to make a short-swing profit. What is “voluntary” is defined broadly as any trade in which the director or officer retains any amount of control.[4] This would include trades pursuant to a 10b5-1 plan, because the director or officer technically retains the ability to cancel the plan at any-time, thereby avoiding liability under Section 16(b).

Another risk resulting from automatic trades under a trading plan is that the director may incur short-swing profits in overlapping 6-month periods. When disgorging profits for short-swing transactions, a court matches the transactions to obtain the maximum amount of profits.[5] Thus, a court may match multiple transactions against a single purchase or sale, as long as each matched transaction is within 6 months of the underlying transaction, and as long as no individual share of stock is counted twice.[6]

Por ejemplo . Director B has a 10b5-1 plan in place which directs its investment manager to sell 500 shares of Director B’s stock whenever it reaches $30 a share. The plan also directs the investment manager to buy $1000 shares of Director A’s stock whenever the price drops below $15 a share. The stock price hits $31 a share on January 1. The plan would automatically sell 500 shares for $15,500. Suppose the price drops to $15 a share on May 30. The plan would buy 1000 shares for $15,000. The stock price rises on July 1 to $32 a share. The plan would sell 500 shares for $16,000. In this example, even though the stock sales occurred more than 6 months apart, each was within six months of the stock purchase. Thus, a court could match the sale of 500 shares on January 1 for 15,500 to the purchase of 500 shares on May 30 for $7500 – resulting in a profit of $8,000. There would also be 500 unmatched shares from the May 30 transaction. These could be matched with the subsequent sale of 500 shares on July 1 – resulting in a profit of $8500. The total disgorgements based on the single purchase of securities would be $16,500.

Moreover, just because profits have been disgorged for one short-swing transaction does not necessarily cut the director off from liability for a subsequent transaction within the same period. Although a court cannot disgorge the same profit twice, a court may order a supplemental disgorgement if, for example, the director or officer engages in a second transaction that yields greater short-swing profits than those already disgorged.

Going back to Example 1 ; assume that Director A voluntarily disgorges the $7,000 short-swing profit on May 16. On May 30, the stock price increases to $28 a share and the plan automatically sells 1000 shares for $28000. Even though Director A has already disgorged short-swing profits relating to his/her purchase of 1000 securities on May 15, the subsequent transaction resulted in a larger short-swing profit than did the January 1 transaction. Thus, in keeping with its duty to maximize profits paid to the corporation, a court might require a supplemental disgorgement of $2000 [the difference between the profit for Transaction 1 and Transaction 2].

¿Por qué esto importa?

Section 16(b) allows private litigants to file a claim seeking disgorgement of profits and recover attorneys’ fees in successful Section 16(b) cases. While the disgorged profits go to the corporation, the fees go to the lawyer bringing the claim. To bring a case, a shareholder must first make a written demand on the corporation to recover the short-swing profits. Because there are virtually no defenses to a short-swing profit case, insiders frequently will disgorged their profits upon demand by the corporation. Thus, Courts have interpreted Section 16(b) to allow lawyers to recover attorneys’ fees — as much as 30% of the recovery by the corporation — for making a successful demand, which is a handsome pay day for just writing a letter.

The individuals who are subject to potential liability under Section 16(b) must report all of their trades on SEC Form 4. Virtually every Form 4 is reviewed by a cadre of lawyers who make their living pursuing Section 16(b) claims. Trades that result in short-swing profits do not go unnoticed.

Liability for short-swing profits is excluded from coverage under directors’ and officers’ liability insurance policies. Corporations are not allowed to indemnify directors and officers for either the profits disgorged under Section 16(b) claims or the attorneys’ fees or other costs incurred in the unsuccessful defense of a Section 16(b) claim.[7]

How can a director or officer mitigate the risks?

There are several ways a director or officer can mitigate the exposure to Section 16(b) liability with its trading plans:

Have a plan only for stocks sales that does not allow for automatic purchases. This, of course, does not eliminate the potential liability, as a director or officer may make a discretionary stock purchase that results in a short-swing profit.

Have a plan that prohibits stock purchases within 6 months and 1 day of any sale; y viceversa.

Have a plan that delegates all authority to a broker/dealer or investment manager who is well informed about the potential risks and liabilities under the Securities laws, in particular, who is cognizant of the potential liability resulting from short-swing transactions.

The risk of liability for short-swing profit liability is real. And, the law rewards individuals who identify situations where potential short-swing profits exist. Therefore, corporate directors, executive officers and 10% shareholders of corporations should take care to ensure that the trading plans established under Rule 10b5-1 to protect themselves from liability for insider trading do not expose them to liability for short-swing profits under Section 16(b).

Robert Brownlie is partner in DLA Piper LLP (US)’s San Diego office and is the Co-Chair of the Firm’s Global Securities Litigation Practice. Kellin Chatfield is an associate in DLA Piper LLP (US)’s San Diego office and is a member of the Firm’s Global Securities Litigation Practice

[1] Robert Brownlie is partner in DLA Piper LLP (US)’s San Diego office and is the Co-Chair of the Firm’s Global Securities Litigation Practice. Kellin Chatfield is an associate in DLA Piper LLP (US)’s San Diego office and is a member of the Firm’s Global Securities Litigation Practice.

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Dice Holdings, Inc. Announces Rule 10b5-1 Stock Trading Plans for Expiring Stock Options

NUEVA YORK. Dec. 10, 2014 /PRNewswire/ -- Dice Holdings, Inc. (NYSE: DHX) today announced that Michael Durney, President & CEO, and two other senior executives have adopted pre-arranged stock trading plans covering stock options set to expire in February 2015. These plans are in accordance with the guidelines specified under Rule 10b5-1 of the Securities and Exchange Act of 1934. Commencing in December 2014, Mr. Durney's plan provides for the exercise of all options (200,000 in total) due to expire in February 2015 and the sale of a portion of those shares acquired upon exercise. The remainder of the shares will be held by Mr. Durney.

Rule 10b5-1 plans allow corporate officers and directors to adopt written, pre-arranged stock trading plans when they are not in possession of material, non-public information. Such plans establish parameters for future stock transactions to automatically take place.

The transactions under the plan will be disclosed publicly through filings with the Securities and Exchange Commission .

About Dice Holdings, Inc.

Dice Holdings, Inc. (NYSE: DHX) is a leading provider of specialized websites for professional communities, including technology and engineering, financial services, energy, healthcare, hospitality and security clearance. Our mission is to help our customers source and hire the most qualified professionals in select and highly skilled occupations, and to help those professionals find the best job opportunities in their respective fields and further their careers. For more than 20 years, we have built our company by providing our customers with quick and easy access to high-quality, unique professional communities and offering those communities access to highly relevant career opportunities and information. Today, we serve multiple markets primarily in North America. Europa. Asia and Australia .