Council of Institutional Investors

Leading Investor Group Applauds SEC Proposal to Tighten Insider Trading Rules

Washington, D.C., December 15, 2021—The Council of Institutional Investors (CII) applauds the Securities and Exchange Commission (SEC) for today unanimously proposing rules to close loopholes and enhance transparency of executive trading plans in company stock.

CII has pressed for reform of these so-called “10b5-1 trading plans” for a decade and its advocacy is referenced multiple times in the rule proposal.

Under SEC Rule 10b5-1, executives, directors and other top company insiders are able to establish a written plan that details when they will be able to buy or sell shares at a predetermined time on a scheduled basis. But press reports and empirical research suggest that some corporate insiders have traded on inside information not available to the public using a 10b5-1 plan as cover. That’s why in December 2012, CII submitted a rulemaking petition to the SEC recommending improvements to Rule 10b5-1.

“At a time when many Americans believe the stock market is rigged, cleaning up practices that can be a pathway for abusive trades will help restore trust in our markets,” said CII Executive Director Amy Borrus. “We applaud the SEC for proposing rules to close loopholes and improve transparency around 10b5-1 trading plans and will review the proposal carefully and submit a comment letter.”

For background on 10b5-1 plans and CII’s views and recommendations on them, see the June 10, 2021, testimony by CII General Counsel Jeff Mahoney before the SEC’s Investor Advisory Committee.

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Click for PDF version. For media inquiries, please contact CII Editor Rosemary Lally.