Do SEC’s 10b5-1 Safe Harbor Rules Need To Be Rewritten?

Mavruk, Taylan; Seyhun, H. Nejat

We examine the profitability of insider trading under SEC Rule 10b5-1 plans. The plans do work to prevent some informed trading. However, on average, insider trading under the safe harbor plans appears to be motivated by material non-public information. We propose some policy changes to tighten the rule and enable separation of informed and uninformed insider trading.

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Columbia Business Law Review

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November 19, 2019