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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
by 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 agoYeah, 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 agoNot 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 agoI think cancelling at opportune moments would fall afoul of 'pre-arrangment' whether using a plan or not.