- About CII
- Board of Directors
- U.S. Asset Owners Advisory Council
- Corporate Governance Advisory Council
- Markets Advisory Council
- CII Staff
- Press Releases
CII Hails SEC for Closing Rule 10b5-1 Insider Trading Loopholes Leading Investor Group Fall Conference
September 21-23, Boston
CII Elects Board Members for 2022-2023 - Members Also Approve Revised Policies on Poison Pills and Shareholder Meetings CII Spring Conference, March 7-9, Washington, D.C. Leading Investor Group Hails SEC Rule Requiring Universal Proxy Cards in Contests for Board Seats CII Virtual Fall Conference, September 22-24 CII Elects Board Members for 2021-2022 CII Virtual Spring Conference, March 8-10 SEC Muzzles the Voice of Investors by Raising the Bar on Shareholder Proposals Leading Investor Group Seeks Strengthened Sustainability Reporting CII Virtual Fall Conference, September 17-22 Leading Investor Group Dismayed by SEC Proxy Advice Rules Leading Investor Group Calls for Action on Racism Amy Borrus to Become Executive Director of the
Council of Institutional Investors on July 1
CII Statement on Virtual Shareholder Meetings During Public Health Emergency CII Elects Board Members for 2020-2021, Approves Three Policies CII Spring Conference, March 9-11, Washington, D.C. Leading Investor Group Blasts SEC’s Proposed Rules for Proxy Advice and Shareholder Proposals CII Announces Advisory Council Members for 2020 Leading Investor Group Rebukes SEC for Proposed Rules That Undercut Critical Shareholder Rights Leading Investor Group Urges Companies to Commit to Long-Term Executive Compensation Council of Institutional Investors Board Appoints Amy Borrus to Succeed Ken Bertsch as Executive Director Media Advisory: CII Fall Conference, September 16-18, Minneapolis Council of Institutional Investors Responds to Business
Roundtable Statement on Corporate Purpose
Leading Investor Group Calls Out Directors Responsible for
Dual-Class Companies Without “Sunsets”
Leading Investor Group Petitions SEC to Require Clear Disclosure on CEO Pay Targets Council of Institutional Investors Says Lyft’s Planned Dual-Class Structure is Harmful to Investors Media Advisory
CII Spring Conference, March 4-6, Washington, D.C.
CII Statement on Share Buybacks CII Research and Education Fund Publishes
Guide to Disclosure of Board Evaluation Processes
Investor Group Applauds CommonSense Principles 2.0 CII Fall Conference, October 23-25, New York City Leading Investor Group Responds to President’s Tweet on Quarterly Financial Reporting Investor Group Responds to Wall Street Journal Editorial CII Applauds Shareholder Protections in House Bill CII Elects New Board, Names Florida SBA Executive
Director & CIO Ashbel Williams Chair
New Report Details Practical Steps Corporate Boards Can Take to Combat Sexual Harassment CII Applauds SEC Commissioner Jackson's Call for Listing Standards to Require Sunsets on Dual-Class Stock CII Spring Conference, March 12-14, Washington. D.C. CII Announces Advisory Council Members for 2018 CII Report Highlights Risks Associated with a Common Chinese Corporate Structure Institutional Investors Oppose Stitch Fix Dual-Class Structure but Welcome Sunset Provision Uber’s Governance — Investor Response Do Not Disadvantage US Investors on Research,
CII Asks SEC
CII Fall Conference, September 13-15, San Diego CII Welcomes S&P Dow Jones’ Decision to Ban New Multi-Class Companies from Key Stock Indexes CII Applauds FTSE Russell Decision to Set Voting Rights
Minimum for Inclusion on Indexes
Investor Group Urges Blue Apron to Ditch No-Vote Shares Institutional Investors Dismayed by House Passage of
Financial CHOICE Act
CII, Institutional Investors with $4+ Trillion in Assets Oppose
Anti-Shareholder Provisions of the CHOICE Act
- CII in the News
- Governance & Financial Information
- Contact Us
- CII Research and Education Fund
CII Hails SEC for Closing Rule 10b5-1 Insider Trading Loopholes
Washington, D.C., December 14, 2022 — CII applauds the SEC’s unanimous approval today of final rules that will close loopholes and enhance the transparency of executive trading plans in company stock. The adoption comes after CII pressed the commission for 10 years to reform these Rule 10b5-1 trading plans.
“The new rules close gaps in the SEC’s enforcement regime that allow executives to use 10b5-1 plans as cover for insider trading,” said CII Executive Director Amy Borrus. “The SEC amendments will better protect public investors from misuse of these plans and strengthen confidence in corporate management teams and the capital markets generally.”
Under the new requirements, executives will have to wait a specified period of time after adopting a Rule10b5-1 trading plans before they can execute trades. The rules also restrict the use of multiple overlapping trading plans. In addition, directors and management must certify when adopting a new plan or modifying an existing one that: (1) they are not aware of any material nonpublic information about a company or its securities; and (2) they are adopting the plan in good faith. More comprehensive disclosure of companies’ policies and procedures related to insider trading also will be required.
More than 20 years ago, the SEC implemented Rule 10b5-1 to let executives buy or sell company shares at a predetermined time on a scheduled basis. Although it was intended to prevent executives from running afoul of the prohibition on trading on material non-public information, over the years loopholes in the rule’s coverage emerged. Press reports and empirical evidence suggested that insiders were adopting, amending and canceling these plans easily and without disclosure—a recipe for fortuitously timed trades while in possession of material, non-public information.
In 2008 after CII members became concerned about these practices, CII adopted a member-approved policy on Rule 10b5-1 plans, specifying that plans should be publicly disclosed; adopted when the participant is not in possession of material, non-public information; and inactive for at least three months following adoption. To prompt SEC action on the issue, CII then submitted a rulemaking petition in 2012 urging the commission to adopt amendments that would place restrictions on the trading that companies and company insiders could conduct under the rule. More recently, CII General Counsel Jeff Mahoney testified in June 2021 before the Investor Advisory Committee on 10b5-1 plans, urging the commission to close existing loopholes.
Click for PDF version. For media inquiries, please contact CII Editor Rosemary Lally.