Do SEC's 10b5-1 Safe Harbor Rules Need to Be Rewritten?
51 Pages Posted: 14 Oct 2015 Last revised: 17 Jun 2016
Date Written: June 16, 2016
We examine the profitability of insider trading under SEC Rule 10b5-1 plans. The plans do work to prevent some informed trading. However, on average, insider trading under the safe harbor plans appears to be motivated by material non-public information. We propose some policy changes to tighten the rule and enable separation of informed and uninformed insider trading.
Keywords: Insider trading, Safe Harbor, Securities and Exchange Commission Rule 10b5-1, Information Access
JEL Classification: K22, M52
Suggested Citation: Suggested Citation