What Changed in the 2023 Rule 10b5-1 Amendments

The short answer

On December 14, 2022, the SEC adopted amendments to Rule 10b5-1, the rule that lets corporate insiders trade their company’s stock through plans set up in advance. The changes took effect on February 27, 2023. They added mandatory waiting periods before the first trade, required directors and officers to certify they had no inside information when adopting a plan, limited overlapping and single-trade plans, and created new disclosure requirements in quarterly and annual reports and on Form 4.

The goal was to close gaps that critics said let insiders set up a plan while holding bad news and start selling almost immediately.

Background: what Rule 10b5-1 does

Insider trading law prohibits buying or selling while aware of material non-public information. Rule 10b5-1 gives an affirmative defense, meaning a defense the trader can raise if accused. If a person adopts a written plan, contract or instruction while unaware of inside information, and later trades follow that plan, those trades are protected even if the person learns something important in the meantime.

Before 2023, the rule did not require any gap between adopting a plan and the first trade, did not limit how many plans a person could have, and did not require companies to tell investors when executives started or ended plans. Our main guide on 10b5-1 trading plans explains how plans work in practice.

Cooling-off periods

The biggest change is a required wait between adopting a plan and the first trade under it. According to the final rule:

• Directors and officers must wait until the later of 90 days after adopting the plan or two business days after the company discloses its financial results for the fiscal quarter in which the plan was adopted. The wait is capped at 120 days.
• Other people, such as employees who are not officers, must wait 30 days.
• The company itself has no cooling-off period. The SEC said it was “not adopting a cooling-off period for the issuer at this time.”

Changing the amount, price or timing of trades under an existing plan counts as ending the old plan and adopting a new one, which restarts the cooling-off period. Purely administrative changes, such as adjusting for a stock split, do not.

To see why the wait matters, consider an executive who learns in May that a big customer may leave. Under the old rule, they could adopt a plan the same day and begin selling the next morning. Under the new rule, a director or officer would wait at least 90 days, by which time the news would likely be public.

Certification for directors and officers

Directors and officers must now include a representation in the plan, when they adopt or modify it, certifying that they are not aware of material non-public information about the company or its securities and that they are adopting the plan in good faith and not as part of a scheme to evade the insider trading rules.

The certification is written into the plan itself rather than filed with the SEC, but it creates a written record of what the insider said at the time.

Good faith, throughout

The rule already required a plan to be entered into in good faith. The amendments added that the person must have “acted in good faith with respect to” the plan for as long as it runs. This targets behavior such as pressuring the company to time an announcement around plan trades, or canceling a plan right before good news.

Limits on overlapping and single-trade plans

Overlapping plans. People other than the company generally cannot rely on the defense if they have more than one plan running at the same time for open-market trades in the same class of securities, subject to limited exceptions, such as a plan that only sells shares to cover taxes when stock awards vest, or a second plan that cannot start trading until the first one is finished. Before 2023, an insider could set up several plans and cancel whichever ones turned out to be inconvenient.

Single-trade plans. A plan designed to carry out a single trade can be used under the defense only once in any 12-month period, again for everyone other than the company.

New disclosure: Item 408 in the 10-Q and 10-K

The SEC added Item 408 to Regulation S-K, which sets out what companies put in their periodic reports.

Item 408(a), quarterly. In each 10-Q and 10-K, a company must disclose whether any director or officer adopted or terminated a Rule 10b5-1 plan, or a similar non-10b5-1 trading arrangement, during the last fiscal quarter. For each one, according to 17 CFR 229.408, the company must describe the material terms other than price, including:

• the name and title of the director or officer,
• the date the plan was adopted or terminated,
• how long the plan runs, and
• the total number of shares to be bought or sold under it.

These disclosures usually appear under the heading “Other Information” near the end of the report. This is often the first public sign that a large sale is coming.

Item 408(b), annual. Companies must disclose whether they have adopted insider trading policies and procedures “reasonably designed to promote compliance with insider trading laws,” and explain why if they have not. Companies with such policies must file them as an exhibit to the 10-K. Our guide on insider buying before earnings explains what these policies usually say about blackout periods.

Item 402(x), option grants. Companies must also give tabular and narrative disclosure of stock option and similar awards granted to named executives close in time to the release of material non-public information, such as just before an earnings report.

Changes to Forms 4 and 5

Two changes affect the filings WallStPal reads every day:

• A 10b5-1 checkbox. Forms 4 and 5 now include a box filers check to show that a reported transaction was made under a plan intended to satisfy Rule 10b5-1(c). Filers must also give the date the plan was adopted. Before this, investors had to hunt through footnotes.
• Gifts on Form 4. Bona fide gifts of stock must now be reported on Form 4 within the standard two-business-day deadline, rather than on Form 5 after year-end.

When the rules applied

According to the SEC’s adopting release, as summarized by Greenberg Traurig:

• The amendments became effective on February 27, 2023.
• Section 16 filers had to use the new Form 4 and Form 5 requirements for reports filed on or after April 1, 2023.
• Companies had to provide the new Item 408 and 402(x) disclosures starting with the first filing covering the first full fiscal period beginning on or after April 1, 2023. Smaller reporting companies received an additional six months.

The amendments did not take away the defense for plans adopted before the effective date. If such a plan is later changed in amount, price or timing, it is treated as a new plan and must meet the new conditions.

What this means when you read a plan sale

A sale marked as a 10b5-1 trade on a Form 4 now comes with more context. The Form 4 now has to give the plan’s adoption date, and you can check the company’s 10-Q for the Item 408(a) disclosure, which tells you how many shares the plan covers in total. If a director or officer adopted the plan after February 2023, at least 90 days passed before the first trade.

The new rules reduce the risk of abuse but do not remove it. A plan is still adopted at a moment of the insider’s choosing, and the person still decides how much to sell. WallStPal labels plan trades and lists them on the trading plans page and the planned sales page. For more on reading sales generally, see what does insider selling mean.

Examples

Terren Peizer and Ontrak, 2021. This case shows the kind of conduct the cooling-off period targets. The Justice Department said Ontrak’s chairman and chief executive adopted a 10b5-1 plan in May 2021 shortly after learning that the company’s relationship with its largest customer was deteriorating, and a second plan in August 2021 minutes after being told the contract would likely be terminated. He “refused to engage in any ‘cooling-off’ period” despite warnings from brokers and others, and began selling on the next trading day after setting up each plan. When the contract loss was announced, the stock fell more than 44%. He was convicted in June 2024 and sentenced in June 2025 to 42 months in prison. The Justice Department called it the first insider trading prosecution based exclusively on the use of 10b5-1 plans. Source: U.S. Department of Justice.

Cheetah Mobile executives, 2022. In September 2022, three months before the amendments were adopted, the SEC charged Cheetah Mobile’s chief executive, Sheng Fu, and its then president, Ming Xu, with insider trading. The SEC found they set up 10b5-1 plans only after learning that a change by an advertising partner could cut the company’s revenue from that partner by up to 50%. They sold more than 96,000 shares combined under the plans, avoiding losses of $303,417. Both settled without admitting or denying the findings, according to a Troutman Pepper summary of the SEC order.

Jeff Bezos and Amazon, 2024. An example of the new disclosure working as intended. Amazon’s annual report, filed in early February 2024, disclosed that Bezos had adopted a plan in November 2023 to sell up to 50 million shares by January 31, 2025. Investors knew the sales were coming before the first Form 4 was filed. His sales of about 50 million shares, worth roughly $8.5 billion, followed between February 7 and February 20, 2024, according to Quartz.

Explain it like I’m 13

Say your school lets you sign up in advance to sell your old textbooks at the book fair. The idea is that you decide early, before anyone knows which books will be in demand.

The old rules let a student sign up the morning of the fair, right after hearing that a new edition was coming out and the old books would be worthless. That defeats the purpose.

The 2023 changes are like a new school rule: if you are a class officer, you have to sign up at least three months ahead, sign a note saying you do not know any secrets, and only have one sign-up sheet at a time. And the school now posts a list of which officers signed up.

Where the rule comes from

• SEC, Insider Trading Arrangements and Related Disclosures, Release 33-11138 (adopted December 14, 2022).
• Federal Register, final rule as published December 29, 2022.
• Regulation S-K Item 408, 17 CFR 229.408.

This guide explains SEC rules and public filings. It is not legal or investment advice.

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