Check an insider trading policy and a Rule 10b5-1 arrangement
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- The tool lists whether the registrant has adopted insider-trading policies and procedures and whether they are filed as an exhibit. For the last fiscal quarter, or the fourth quarter in an annual report, it lists each director or officer adoption or termination of a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, with whether it is intended to satisfy Rule 10b5-1(c), the name and title, the date, the duration, and the aggregate number of securities. It leaves out the price. It calculates a cooling-off date only from the adoption date and, where the lawyer supplies it, the date the quarter's financial results were disclosed.
- What the lawyer must review
- Item 408 of Regulation S-K, 17 CFR § 229.408, and Rule 10b5-1, 17 CFR § 240.10b5-1. Item 408(a) requires disclosure of whether, during the registrant's last fiscal quarter, or the fourth fiscal quarter in an annual report, any director or officer as defined in Rule 16a-1(f) adopted or terminated a contract, instruction, or written plan intended to satisfy Rule 10b5-1(c), or a non-Rule 10b5-1 trading arrangement as defined in Item 408(c). The disclosure identifies whether the arrangement is intended to satisfy the affirmative defense and describes the material terms other than price, including the name and title, the date of adoption or termination, the duration, and the aggregate number of securities to be purchased or sold. Item 408(b) requires disclosure of whether the registrant has adopted insider-trading policies and procedures governing purchases, sales, and other dispositions by directors, officers, and employees, or by the registrant itself, that are reasonably designed to promote compliance with insider-trading laws, rules, regulations, and applicable listing standards. If it has not, it explains why. Policies that have been adopted are filed as an exhibit. Filing them in the code of ethics under Item 406 satisfies that exhibit requirement where the Item 406 conditions are met. Rule 10b5-1(c)(1)(ii) requires that the contract, instruction, or plan be given or entered into in good faith and not as part of a plan or scheme to evade the prohibitions, and that the person has acted in good faith with respect to it. For a director or officer as defined in Rule 16a-1(f), no purchases or sales occur until the later of 90 days after adoption or two business days after disclosure of the issuer's financial results for the completed fiscal quarter in a Form 10-Q or Form 10-K, or in a Form 20-F or Form 6-K for a foreign private issuer, subject to a maximum of 120 days after adoption. For a person who is not the issuer and not such a director or officer, the cooling-off period is 30 days after adoption. A director or officer includes a representation that, on adoption, the person is not aware of material nonpublic information about the security or the issuer and is adopting the plan in good faith and not as part of a plan or scheme to evade the prohibitions. Paragraph (c)(1)(ii)(D) limits overlapping open-market plans of a person other than the issuer, with a later-commencing plan exception and an eligible sell-to-cover exception. The lawyer decides whether the affirmative defense is available.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes assembling provisional schedules. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Trace every relied-on figure to its source, confirm dates and assumptions, and independently recalculate totals or derived amounts.
- Calculate operative dates independently from the current rule and actual triggering event. Check exceptions and record the verified deadline.
- Check the current court or regulator requirements, prescribed form and attachments for the intended document and filing.
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.