On December 14, 2022, the Securities and Exchange Commission unanimously adopted rules and amendments that:
- Implement mandatory cooling-off periods for Rule 10b5‑1 trading plans for directors, officers and other persons (other than the issuer);
- Enhance the affirmative defense requirements under Rule 10b5‑1 (including by adding a written certification requirement and providing that, for non-issuers, the affirmative defense will not be available for overlapping plans or to more than one single-trade plan during any consecutive 12-month period); and
- Add required disclosure regarding insider trading plans, policies and procedures.
In a significant change from the proposed rules, the final rules do not require a cooling-off period for issuers or prohibit issuers from entering into overlapping plans or multiple single-trade plans. On the other hand, the rules require a cooling-off period for all persons other than the issuer, whereas the proposed rules had limited the cooling-off period to issuers, directors and officers.
The amendments also add new disclosure requirements for grants of options, stock appreciation rights and other similar instruments made close in time to disclosure of material non-public information, or MNPI, and require reporting gifts of securities by insiders on Form 4, rather than on Form 5.