Amendments to Rule 10b5-1’s Defense to Insider Trading Liability & Related Disclosures

On December 14, 2022, the US Securities and Exchange Commission (“SEC”) unanimously adopted amendments to Rule 10b5-1 under the Securities Exchange Act of 1934 (“Exchange Act”) and related disclosure obligations for public companies. The amendments (i) add new conditions to the availability of the affirmative defense to insider trading liability contained in Rule 10b5-1 designed to address concerns about the rule’s abuse by insiders to trade securities on the basis of material nonpublic information (“MNPI”) and (ii) enhance public disclosure by issuers and insiders of trading plans designed to comply with Rule 10b5-1. This piece summarizes the principal changes made by the amendments and discusses some practical considerations.