What a 10b5-1 plan is

What a plan is

Company insiders are people like the boss, the board members, and anyone who owns a big piece of the company. They often know things the public does not know yet. So they have to be careful about when they buy or sell their company's stock.

A 10b5-1 plan is one way to do it safely. The insider writes down ahead of time when they will trade, or at what price. Then the trades happen on their own, following the plan. If the insider set up the plan honestly, before they knew any secret news, the plan protects them. The name comes from the rule that allows it: Rule 10b5-1.

The waiting periods

In 2023 the SEC (the government agency that oversees the stock market) made the rules stricter. For plans set up since February 27, 2023:

A boss or board member has to wait before the first trade. The wait is at least 90 days. It can be longer, up to 120 days, if the company has not yet shared its results for that quarter.

Other insiders wait 30 days.

Most insiders can have only one plan running at a time.

A plan made for a single trade can be used only once a year.

How to spot a plan on a Form 4

A Form 4 is the report an insider files after they trade. Since April 1, 2023, it has a box the insider checks when a trade was part of a plan. It also says the date the plan was made. Companies also report every three months which bosses and board members started or ended a plan.

This matters when you read about a big sale. A sale from a plan was decided months earlier. It is not a snap decision made that week.

On Paydirt

Paydirt lists every trade just as it was filed, plan or no plan. Every row links to the original filing on SEC EDGAR, the government's public filing website. There you can see the checkbox and the date the plan was made.

A trade from a plan can sometimes be filed after the usual two-day deadline without breaking any rule. That is why Paydirt's late marker only tells you about the dates. The Form 4 guide explains more.