Interpretive Guidance for SEC’s Insider Trading Rules

Regulation S-K: Item 408(a) – Insider Trading Arrangements and Policies

(Questions 133A.01 and 133A.02)

• The requirement to disclose:
  • The termination of an insider trading plan does not apply to plans that were terminated due to their expiration or completion.
  • Whether any director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement applies to trading arrangements covering securities for which the director or officer has a direct or indirect pecuniary interest.

Exchange Act Section 16 and Related Rules and Forms: Form 4

(Question 135.04)

• The checkbox on Form 4 to identify any Rule 10b5-1 trading plan transactions does not apply to trading plans that were adopted before April 3, 2023, the effective date of the new checkbox.

Exchange Act Rules: Manipulative and Deceptive Devices and Contrivances: Rule 10b5-1

(Questions 120.29, 120.30, and 120.31)

• Directors and officers are currently subject to a mandatory cooling off period that is the later of 90 days after the plan’s adoption, or two business days following the disclosure of the issuer’s financial results in Form 10-Q or Form 10-K for the fiscal quarter when the plan was adopted. The day that Form 10-Q or Form 10-K is filed (whether before or after trading opens) does not count as a business day. For example, if Form 10-K is filed on Monday, the cooling off period applies to Tuesday and Wednesday.  
• The rules contain limits on the use of multiple overlapping insider trading plans. An open-market transaction conducted at the direction of a 401(k) plan administrator to match a contribution by the participant with employer stock is not an overlapping plan for Rule 10b5-1.