Changes are likely coming to SEC Rule 10b5-1, and with them, new litigation risks for corporate officers and directors.

Rule 10b5-1 permits corporate insiders to establish stock trading plans that specify prescheduled dates or criteria for trading the insider’s stock. Corporate executives facing securities fraud claims regularly rely on their 10b5-1 trading plans to rebut claims that they took advantage of material nonpublic information (MNPI) to sell stock before a negative corporate disclosure.

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