A Rule 10b5-1 plan is a written plan to buy or sell a company's shares on a schedule or formula, set up at a time when the person does not have material non-public information. Trades made later under the plan follow the plan, not a decision made at the time of the trade.
Rules since 2023
- Directors and officers must wait before the first trade under a new or changed plan: the later of 90 days, or two business days after the company files its results for the quarter in which the plan was adopted, up to 120 days.
- Form 4 has a checkbox that says whether a transaction was made under a 10b5-1 plan, with the adoption date usually in a footnote.
- Companies must say each quarter, in their 10-Q or 10-K, which directors and officers adopted or ended a plan.
Reading it
A sale under a plan was decided months earlier, often for ordinary reasons such as diversification or tax. It tells you less about the insider's view today than a sale made without one. Plans can still be ended early, and an ended plan is worth noting.