The following is not meant to be legal advice.
Though 10b5-1 plans are not required to be disclosed on Form 8-K by the Securities and Exchange Commission (SEC), some companies may start to disclose the implementation of 10b5-1 trading plans on Form 8-K to guarantee that the public is put on notice of a 10b5-1 plan’s existence. This may fend off any allegations that the insider is manipulating the disclosure of material non-public information to time with the automatic trades instructed by the 10b5-1 plan.
Another way to avoid securities class action lawsuits, may be to mandate that at least 30 days elapse between the implementation of a new 10b5-1 plan and the first trade made under the plan. A ninety-day period would be even more conservative. This will minimize any appearance of market timing.
One example would be for trading plans to be implemented during an open window for trading. When the window closes, the trading plan instructions do not take effect until the next open window. When the window next opens, the trading plan goes into play, and the insider is able to trade automatically according to plan instructions from then on no matter whether there is an open or close window for insiders.
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