Executive Services - Rule 10b5-1


Rule 10b5-1

Traditionally, an insider’s transactions of company stock could only be executed during so-called window periods. These might last just a few weeks after the release of quarterly financial results and apply only if no significant news affecting market performance is pending. Such window periods, however, do not always coincide with an individual’s liquidity interests.

In 2000, the Securities and Exchange Commission (SEC) adopted Rule 10b5-1 to clarify its broader rule against insider trading. Rule 10b5-1 lets public company officers and directors use preprogrammed trading plans – if they did not have access to certain nonpublic information when the plans were adopted – to buy or sell positions in their company stock.

Rule 10b5-1 enables executives to more effectively:
  • Meet stock ownership guidelines
  • Exercise employee stock options
  • Meet certain expenses such as college tuition or taxes
Baird’s Executive Preprogrammed Trading Plans allow executives to both comply with SEC Rule 10b5-1 and buy or sell company stock on a timetable that meets their personal liquidity or investment goals.

Baird can customize these plans to allow executives the flexibility to designate in advance the dates, price ranges and amount of company stock to be traded over a specific time period.