10B5-1 plan for insider trading? Has anyone opened this type of account, or hold securities in this type of

Question:

I am a financial advisor and I am looking to open a 10B5-1 plan for a corporation. From my understanding, an insiders needs to file a 144 with the SEC and also a 13D if they have over 5% of the stock. The 10B5-1 plan allows the corporate insiders to trade there securities freely. How much stock can they put into this account? Can they roll shares into this account? How many shares can be traded without filing with the SEC, or do they have to file a 144 anyways? If they can freely trade there companies stock, obviously not short, how does the SEC know how to regulate the shares not inside the plan? I am looking for someone that has experience with this type of plan to answer. My compliance department told me the “Text book answer”, I just don’t want any complication down the road with the other accounts. I am not looking to “sell off” a block of stock, but if they can buy or sell (not short) when they want, it would be great if the market suddenly turns.

Answer:
I think you need legal advice on exactly how this is set-up. Basically you are setting aside a certain number of shares that will be traded based on a "rule" so there is no discretion on the part of managers. Once a plan is filed, I still think you need to file the 144 for each sale. The 10B5-1 just protects you from claims that you are trading on inside information.

A simple plan would be a plan to sell 1000 shares every day until I sell 250000 shares of stock. However, you can write these plans to include limits (i.e. as long as the stock is above $25). Or you can say you plan to sell all 250000 shares once it reaches a limit (i.e. say $35). I believe you can basically cancel the plan at any time too so there is really no teeth in a plan.

I don't think you can create a plan to buy stock.

10B5-1 plan for insider trading? Has anyone opened this type of account, or hold securities in this type of

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