To what extent are individual stock trading plans (entered into pursuant to SEC Rule 10b5-1) helpful in defending against private securities fraud claims? At least one court, the N.D. of Cal. in the Monterey Pasta case, has suggested that the use of a stock trading plan may allow a defendant to negate any inference of fraudulent intent based on his stock sales because the sales were pre-scheduled. As more company executives implement these plans, the issue is likely to gather steam.
The author of The 10b-5 Daily, along with one of his colleagues, has an article on the topic – “Individual Trading Plans Can Help Defend Securities Fraud Claims” – in the most recent edition of Compliance Week (July 7).