Shutterstock It's Time To Rescind the Get Out of Jail Free Card Afforded Executives by 10b5-1 Plans
The law should be modified to require that it be public whether a 10b5-1 plan exists and include the date it was entered into; all 10b5-1 plans be approved by a company's compensation committee; and most critically, the owner of the plan must be blind to the dates and/or strike prices for purchases and sales set forth in their plan, so that they are not incentivized to improperly keep material news from investors.
July 23, 2021 at 10:30 AM
6 minute read
By now, the story is familiar: A company announces either good or bad news and its stock price goes up or down, only for investors to later learn that around the same time, corporate insiders purchased or sold millions of dollars of their company stock holdings, often for the first time in years. It's alleged to have happened at Eastman Kodak, Moderna Therapeutics, and, more recently, at government contractor Emergent BioSolutions, whose share price fell over 50% from February 2021 to April 2021, coinciding with its announcement of negative financial results and COVID-19 vaccine production problems. Just before that period of bad news, for the first time in over four years, its CEO Robert G. Kramer sold a substantial amount of his company stock for proceeds of over $10 million.
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