3 ms·

"pre-arranged" != "Rue 10b5-1 trading plan" I'm not an expert in stock trading, but this logic seems very plausible. A Plan does not preclude other arrangement

"pre-arranged" != "Rue 10b5-1 trading plan" I'm not an expert in stock trading, but this logic seems very plausible. A Plan does not preclude other arrangements to sell shares

steveklabnik 7y ago
I am admittedly not the most educated person in this area (I wasn't 100% sure that "rule 10b5-1" was the rule that applied here), so I'd like to learn more. Can you give me an example of a reason you'd pre-arrange the sale of stock but not do it in accordance with Rule 10b5-1?
- jagged-chisel 7y ago
  Arranging some other transaction (e.g. buying a yacht) in advance that would require cash, so the executive plans in advance a single sale to execute just ahead of the need for cash. If we go with the yacht purchase, perhaps in six months the builder needs final payment, so Mr. Executive arranges for a single sale of company stock a couple weeks before that date. Maybe such a thing does indeed require amending The Plan, but I haven't seen anyone with expertise chime in. I'm just saying that logically, "pre-arranged" does not necessitate "working within Rule 10b5-1"
  - steveklabnik 7y ago
    Yeah, I would assume that something like that would also be done within Rule 10b5-1, but that has hidden assumptions that I know nothing about, like that it's not just "the plan" but multiple plans, etc. Anyway, thanks.
  - semi-extrinsic 7y ago
    Not an expert either, but if such a thing was allowed, you could arrange to buy expensive stuff you want to have on a regular basis (I would assume this is not uncommon for CEOs) and then just agree orally with the seller to cancel the transactions when the stock is down, go through with it when the stock is up.
    - jagged-chisel 7y ago
      I think cancelling at opportune moments would fall afoul of 'pre-arrangment' whether using a plan or not.
nolok 7y ago
Maybe, but "pre-arranged legally" == "Rue 10b5-1 trading plan". So if it was pre-arranged but was not following the rules, it doesn't matter that it was pre-arranged, it's still counts as illegal insider trading as-if not pre-arranged. Reasons being super obvious, since it would be easy to do insider trading in a stealthy way otherwise.
scarejunba 7y ago
The purpose of that trading plan is precisely to allow you to have arrangements to sell shares as an insider. So if he was pre-arranging legally, this is how he'd do it. You don't have to be an expert. Practically everyone who isn't rank-and-file gets the dossiers on this nonsense in a public company.

"pre-arranged" != "Rue 10b5-1 trading plan" I'm not an expert in stock trading, but this logic seems very plausible. A Plan does not preclude other arrangements to sell shares

steveklabnik 7y ago

I am admittedly not the most educated person in this area (I wasn't 100% sure that "rule 10b5-1" was the rule that applied here), so I'd like to learn more. Can you give me an example of a reason you'd pre-arrange the sale of stock but not do it in accordance with Rule 10b5-1?

jagged-chisel 7y ago
Arranging some other transaction (e.g. buying a yacht) in advance that would require cash, so the executive plans in advance a single sale to execute just ahead of the need for cash. If we go with the yacht purchase, perhaps in six months the builder needs final payment, so Mr. Executive arranges for a single sale of company stock a couple weeks before that date. Maybe such a thing does indeed require amending The Plan, but I haven't seen anyone with expertise chime in. I'm just saying that logically, "pre-arranged" does not necessitate "working within Rule 10b5-1"
- steveklabnik 7y ago
  Yeah, I would assume that something like that would also be done within Rule 10b5-1, but that has hidden assumptions that I know nothing about, like that it's not just "the plan" but multiple plans, etc. Anyway, thanks.
- semi-extrinsic 7y ago
  Not an expert either, but if such a thing was allowed, you could arrange to buy expensive stuff you want to have on a regular basis (I would assume this is not uncommon for CEOs) and then just agree orally with the seller to cancel the transactions when the stock is down, go through with it when the stock is up.
  - jagged-chisel 7y ago
    I think cancelling at opportune moments would fall afoul of 'pre-arrangment' whether using a plan or not.

nolok 7y ago

Maybe, but "pre-arranged legally" == "Rue 10b5-1 trading plan". So if it was pre-arranged but was not following the rules, it doesn't matter that it was pre-arranged, it's still counts as illegal insider trading as-if not pre-arranged. Reasons being super obvious, since it would be easy to do insider trading in a stealthy way otherwise.

scarejunba 7y ago

The purpose of that trading plan is precisely to allow you to have arrangements to sell shares as an insider. So if he was pre-arranging legally, this is how he'd do it. You don't have to be an expert. Practically everyone who isn't rank-and-file gets the dossiers on this nonsense in a public company.