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Call for SEC action

Article co-authored by Professor Alan Jagolinzer of Cambridge Judge calls for Securities and Exchange Commission to reform ‘pre-planned’ stock sale rules.

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Professor Alan Jagolinzer

An article co-authored by Professor Alan Jagolinzer of Cambridge Judge Business School in The Hill, a Washington-based publication, calls for the Securities and Exchange Commission (SEC) to reform policies relating to ‘pre-planned’ stock sales by company executives.

The article focuses on ’10b5-1′ plan stock sales in the US, recently used by executives at pharmaceutical companies Pfizer and Moderna which have developed coronavirus vaccines.

“If used as intended, these plans provide corporate insiders with a tool to trade their shares and obtain liquidity without raising legal concerns. But like any tool, these plans can be misused,” the article says.

The article calls for the SEC to take five reforming steps: require disclosure of whether a trade was made pursuant to a 10b5-1 plan; require disclosure of the plans themselves; require a ‘cooling-off’ period between when a plan is adopted and the first trade; require companies to explain why they allow use of such plans close to corporate events; and enforce existing laws covering filing deadlines.

The article in The Hill, which focuses on Capitol Hill and US policymaking, is co-authored by Alan Jagolinzer, Professor of Financial Accounting and Director of the Centre for Financial Reporting & Accountability (CFRA) at Cambridge Judge Business School, Professor David Larcker of Stanford University, and Professor Daniel Taylor of the Wharton School at the University of Pennsylvania.