Undoing a Deal with the Devil: Some Challenges for Congress\u27s Proposed Reform of Insider Trading Plans

The adoption of Rule 10b5-1 was, in a manner of speaking, a deal with the devil that the SEC and some lawmakers now appear to regret having made. The problem is that, as is often the case with such a deal, it cannot be easily undone. I identify challenges presented by the restrictions on Trading Plan use that Congress has proposed in the Corporate Insiders Act. In light of these challenges, I argue that effective Trading Plan reform cannot be accomplished by simply restricting the use of Trading Plans while leaving Rule 10b5-1(b)\u27s awareness test in place. If there is to be reform, it should be comprehensive. If neither the SEC nor Congress desires comprehensive reform of our current insider trading regime, however, I conclude by offering the consolation that permitting insiders to continue to use Trading Plans strategically may not be so bad after all. Perhaps even a deal with the devil can be worked for the good of investors