The changing role of preplanned insider trades: Evidence from the SEC rule 10b5-1 amendments

This paper examines the impact of the SEC’s 2022 amendments to Rule 10b5-1 on the informativeness of insider trading. Using transaction-level data from 2000 to 2024, we compare preplanned and non-preplanned trades before and after the reforms. We find that prior to the amendments, both types of trades exhibited contrarian behavior and predictive power, with non-preplanned transactions being especially informative. After the reforms, however, the predictive content of preplanned trades declines substantially, while the signals from non-preplanned trades are confined to the short term. These results suggest that the amendments curtailed insiders’ ability to use preplanned plans opportunistically, thereby advancing the regulatory goal of reducing informational advantages in insider trading.