By the InsiderAlpha research team · Updated Jul 16, 2026 · Sourced from SEC EDGAR filings

Rule 10b5-1 Trading Plans Explained

Rule 10b5-1 is an SEC regulation, adopted in 2000, that lets corporate insiders set up a written plan to buy or sell company stock at predetermined times, prices, or quantities — provided they establish the plan while not in possession of material non-public information (MNPI). When a trade later executes under the plan, the insider has an affirmative defense against insider-trading allegations even if they happen to hold MNPI on the day of the trade.

How a 10b5-1 plan works

An executive who wants to diversify or fund a large purchase can't simply sell whenever they like — they are often in possession of MNPI, or inside a blackout window. A 10b5-1 plan solves this: they hand discretion to a broker in advance via a formula (for example, "sell 10,000 shares on the first trading day of each quarter"). Because the timing is set ahead of time, the individual trades are insulated from any later information advantage.

How to spot 10b5-1 trades on Form 4

Filers usually disclose the plan in the Form 4 footnotes or remarks, with language such as:

"Sale effected pursuant to a Rule 10b5-1 trading plan adopted on [date]."
"This transaction was made pursuant to a 10b5-1 plan."

Since the 2023 reforms, Form 4 also includes a dedicated checkbox indicating whether a reported transaction was made under a 10b5-1 plan, which makes detection more reliable. InsiderAlpha scans both the checkbox and the footnote text.

Why these trades are less informative

The entire point of a 10b5-1 plan is that the insider does not control the timing of any individual trade. So a 10b5-1 sale is not evidence that the insider thinks the stock is overvalued today — the calendar simply said "sell." This is why filtering plan trades out of the signal is essential: they are the single biggest source of false "insider selling" alarms.

The 2023 SEC reforms

Effective February 2023, the SEC tightened the rule significantly:

A 90-day cooling-off period for officers and directors (and 30 days for the company itself) before any trade can occur under a newly adopted or modified plan.
A requirement that single-trade plans be limited to one per 12-month period.
A good-faith certification, and a bar on overlapping plans.
Quarterly disclosure of plan adoptions and terminations in company filings.

A note on purchases

While most 10b5-1 activity is selling, insiders occasionally buy under plans too. A planned buy is weaker than a spontaneous open-market purchase, so we discount it in scoring rather than treating it as a top conviction signal.

Learn to filter 10b5-1 noise from real signals → · Browse recent Form 4 filings →