Do SEC’s 10b5-1 Safe Harbor Rules Need To Be Rewritten?

Sunday, June 12th, 2016 at 10:51 pm by Taylan Mavruk and H. Nejat Seyhun

Taylan Mavruk and H. Nejat Seyhun, Do SEC’s 10b5-1 Safe Harbor Rules Need To Be Rewritten?, 2016 Colum. Bus. L. Rev. 153 (2016).

We examine the profitability of insider trading under SEC Rule 10b5-1 plans. The plans do work to prevent some informed trading. However, on average, insider trading under the safe harbor plans appears to be motivated by material non-public information. We propose some policy changes to tighten the rule and enable separation of informed and uninformed insider trading.

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© 2016 Taylan Mavruk and H. Nejat Seyhun

Author Information

Assistant Professor of Finance, University of Gothenburg; and Professor of Finance and Jerome B. and Eilene M. York Professor of Business Administration, Stephen M. Ross School of Business, University of Michigan, respectively