What is a 10b5-1 trading plan?

A Rule 10b5-1 trading plan is a contract, instruction, or written plan that can provide an affirmative defense against insider trading liability if it is set up when the insider is not aware of material nonpublic information and the rule’s conditions are satisfied.

In practical terms, it allows insiders to pre-arrange trades by specifying: - the amount - the price - the timing - or a formula or mechanism for determining those terms

The SEC strengthened the rule in 2022. Among other changes, it introduced: - mandatory cooling-off periods for many plans - a good-faith requirement - restrictions on overlapping plans - limits on certain single-trade plans - additional disclosure requirements for Rule 10b5-1 transactions

As a result, a 10b5-1 plan is meant to separate the decision to trade from the later execution of the trade.