SEC Adopts Significant Changes To Rules And Reporting Requirements Regarding Trading By Insiders

On December 14, 2022, the Securities and Exchange Commission (the "SEC") adopted amendments to Rule 10b5-1(c) under the Securities Exchange Act of 1934 (the "Exchange Act") and certain other rules and regulations that will have a significant impact on the trading of securities by persons who have access to material nonpublic information ("MNPI") about the security or the issuer of the security.¹

Rule 10b5-1(c) provides a widely used affirmative defense against insider trading liability under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder for corporate insiders to sell securities and for issuers to repurchase securities, permitting them to adopt a plan that would trigger trades at some point in the future based on pre-established criteria. The amendments to Rule 10b5-1(c) adopted by the SEC impose additional requirements that must be met in order to benefit from the affirmative defense under Rule 10b5-1(c). The requirements differ based on who is