Late last year, the U.S. Securities and Exchange Commission (SEC) announced a proposed rulemaking to further crack down on insider trading. The SEC action would amend Rule 10b5-1, which allows a company’s officers or other insiders to sell a position while in possession of “material non-public information” if that sale is executed in accordance with a plan created during an open trading window.
In other words, the proposed amendment would close loopholes within an existing rule that effectively allow executives to deal in insider information with immunity. And it couldn’t be timelier. Insider sales increased 30% year-over-year in 2021, up nearly 80% against a 10-year average, and corporate leaders and CEOs, including many high-profile names, sold a record $69 billion in stock last year, CNBC reported in December.
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