SEC Insider Trading Rule Has Loopholes
AUSTIN, Texas -- A rule to limit trading based on nonpublic stock information has limited effectiveness, according to a recent study by Texas McCombs Finance Professor Robert Parrino.
Issued in 2000 by the Securities & Exchange Commission, Rule 10b5–1 requires corporate insiders to schedule the purchase or sale of a predetermined number of shares through a third-party broker up to two years in advance. Because the trades under these “plan” sales are scheduled in advance of their execution, insiders are presumed less likely to be acting on inside information.
But ...













