The Securities and Exchange Commission instituted a rule in 2000 that gave insiders at publicly traded companies more flexibility to trade the stock they hold in their own companies. Insiders, defined as executives, directors and large shareholders, could adopt a plan for selling stock in the future and be protected from charges of illegally trading on inside information as long as they didn’t have nonpublic knowledge when they set up the plans. Some executives and directors are required to have the plans reviewed and approved by their companies.
These preset trading plans, often referred to as 10b5-1 plans after the regulation that created them, have accounted for at least 60% of insider trades in recent years, according to a Wall Street Journal analysis of trading disclosures by insiders.
Methodology: How the Journal Analyzed the Data on Insider Stock Sales Source link Methodology: How the Journal Analyzed the Data on Insider Stock Sales