ANALYSIS: Insider Trading Plan Rules Are Likely to Change

More than 20 years ago, the SEC adopted regulatory changes in an attempt to bring some clarity to the confusing body of judge-made law on insider trading. These rules clarified when a person is considered to have traded on the basis of material nonpublic information (MNPI), and they included amendments that allowed insiders to make pre-arranged trades. One particular problem has arisen out of these affirmative defenses for advance trading plans, however: The rules, designed to minimize insider control over these trades, may actually provide significant discretion to the insider. As SEC Chairman Gary Gensler stated in a June speech, ...