Complying with the SEC’s insider trading reforms

On December 14, 2022, the Securities and Exchange Commission (“SEC”) adopted new rules and rule amendments intended to enhance investor protections against insider trading. These changes (i) add new conditions to the availability of Rule 10b5-1’s affirmative defense to insider trading liability; and (ii) create new disclosure requirements for public companies and their executive officers and directors. The amendments to Rule 10b5-1 become effective on February 27, 2023 and create phase-in periods for the new public company disclosure requirements.

In this article, we summarize the Rule amendments and discuss the steps public company boards and/or general counsel and chief compliance officers can take now in preparation for the effectiveness of the amendments.