SEC’s Proposed 10b5-1 Rules: What Companies Should Do Now

December.17.2021

The SEC has proposed amendments to add new conditions to the availability of an affirmative defense under Rule 10b5-1 and add new disclosure requirements regarding insider trading policies and procedures of issuers as well as the timing of stock option grants.

Many of these proposed amendments were expected, such a statutory cooling-off period for 10b5-1 plans. However, several proposed amendments were not as widely anticipated, such as those requiring that companies publicly disclose their “insider trading policies and procedures,” as well as the timing of stock option grants to directors and officers.

In this guest post for TheCorporateCounsel.net, Orrick’s JT Ho, Carolyn Frantz and Soo Hwang outline what steps companies should proactively take in light of this proposal.

Authors

J. T. Ho Partner, Corporate Governance, Capital Markets

San Francisco

See my bio

D:+1 415 773 5624
E: [email protected]

Practice:

Corporate Governance
Capital Markets
Compensation & Benefits
Environmental, Social & Corporate Governance (ESG)

vCard

See full bio

J. T. Ho Partner

San Francisco

J.T. counsels companies on Board and committee oversight, assessment and composition issues, developing effective shareholder engagement programs and governance-related disclosures, and helps companies to understand and consider the views of proxy advisors and institutional shareholders and other long-term stakeholders in their decision making. Recently, he has helped many companies successfully address ESG related shareholder proposals and activism campaigns and refine their disclosure controls and procedures and enterprise risk management programs to address cybersecurity and climate risk.

On the securities front, he focuses on advising clients in connection with securities offerings, proxy statements, periodic SEC reports, stock exchange listing obligations, stock repurchases and the sale and reporting of securities by insiders. He regularly counsels companies on difficult disclosure issues and provides training on disclosure best practices.

J.T. also advises on compensation committee matters and related disclosures as well as the design of cash and equity incentive plans, and has helped over a dozen companies remediate failed or low "say on pay" votes.

J.T. plays a leading role in Orrick’s ESG practice, helping companies identify and understand the risks and opportunities associated with ESG and incorporating ESG into a company’s overall business strategy and incentive plans. More recently, he has helped companies navigate the growing anti-ESG movement.

J.T. serves on the advisory board of The Corporate Counsel and hosts J.T.'s Fast Five, a monthly podcast on The Corporate Counsel where J.T. covers the five things public companies ought know each month. J.T. Ho also regularly presents on and contributes articles related to corporate governance, securities, executive compensation and ESG. He has presented at notable conferences sponsored by The Corporate Counsel, the Securities Regulation Institute, The Rock Center for Corporate Governance, the Society for Corporate Governance, the ABA, the Practical Law Institute, Compensation Standards, Practical ESG and NASPP. He is recognized as a Next Generation Partner by Legal 500, as one of the Ones to Watch® Best Lawyers in America, and was named a Rising Star by Super Lawyers in 2018, 2019, 2020, 2021 and 2022.

Carolyn Frantz Senior Counsel

Seattle

See my bio

Practice:

vCard

See full bio

Carolyn Frantz Senior Counsel

Seattle

A former Rhodes Scholar, Carolyn clerked for Supreme Court Justice Sandra Day O’Connor and D.C. Circuit Court of Appeals Judge David S. Tatel, before teaching at the University of Chicago Law School. She was a litigation partner at a major law firm for eight years before joining Microsoft, where she managed the company’s worldwide tax litigation until her appointment as Corporate Secretary.

As Microsoft’s Corporate Secretary, Carolyn had the opportunity to work closely with the company’s Board of Directors and senior leadership, gaining a first-hand understanding of the opportunities and challenges facing technology companies in a dynamic competitive and regulatory environment. As the head of the Corporate Legal Group, Carolyn was responsible for legal issues regarding securities law and disclosures, treasury and finance, international trade, procurement, real estate, and many other issues. Building on her extensive litigation experience, which includes managing tax disputes domestically and abroad, as well as litigating multidistrict products liability, consumer cases, and commercial contract disputes, Carolyn understands the practical challenges companies face and how those intersect with Board reporting, securities disclosures, and internal accountability. She also brings her understanding of board governance, corporate law, and ESG to select litigation matters.

Carolyn is also frequently called on to serve as a resource to new legal leaders in their roles supporting and interacting with their Boards.

Soo Hwang Of Counsel, Capital Markets, Technology Companies Group

Santa Monica

See my bio

D:+1 310 633 2821
E: [email protected]

Practice:

Capital Markets
Technology Companies Group

vCard

See full bio

Soo Hwang Of Counsel

Santa Monica

Soo counsels public and late-stage private companies on both registered and exempt offerings of securities and assists late-stage private companies as they prepare for their initial public offering. She also advises public companies on matters pertaining to corporate governance, stock exchange listing obligations and SEC reporting and disclosure obligations, including interpreting the latest rules and novel securities law issues.