A recently effective SEC insider trading rule requires new disclosures and boosts investor protections.
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Stakeholders can agree that trading on inside information harms investors and the foundation of U.S. capital markets. While the Securities and Exchange Commission (SEC) has long had insider trading rules, on Dec. 14, 2022, the SEC finalized a new rule with amendments designed to strengthen investor protection and to help shareholders understand more about the nature and timing of insiders’ trades. The final rule, “Insider Trading Arrangements and Related Disclosures,” updates conditions of the affirmative defense to insider trading liability in Securities and Exchange Act Rule 10b5-1, places certain restrictions on Rule 10b5-1 plans, and requires new disclosures.
The final rule became effective Feb. 27, 2023. Required disclosures for calendar year issuers start for the quarter beginning April 1, 2023.