PTPs Gaming SEC’s Insider Trading Regs?

You think some CEOs are gaming the stock market game with pinpointing game rigging tech on company shares they get as part of pay package? Some academics & SEC think maybe so … yet, thanks to SEC regs, its perfectly legal.

As an exclusive WSJ study showed, “One CEO sold about 40% of the shares he owned in his company at a high point, making a $36M profit. One week later, the company started releasing a string of negative announcements. Over three [subsequent] months, the stock price dropped 60%.” Coincidence? Or, thank you for what’s called a “preset trading plan” and related technology that’s increasingly being used by company insiders. The short explanation: It allows executives to automatically benefit “when sales happen quickly after the plans’ adoption”.

Not that the gimmick isn’t ok’d by Uncle Sam. PTPs, the WSJ reminds, were created by a little know regulation 20 years ago and only now is it becoming apparent they’ve “become a popular way for top executives and other company insiders to sell shares … netting remarkably lucrative financial windfalls in many cases. Sweeter still: “Under the rule, corporate insiders can be shielded from allegations of trading on inside information as long as they sell using an automated trading plan [that was] set up when they didn’t know about any impending news.” Damn. Can you picture Pelosi & Biden gnashing their teeth saying, “Why don’t those in Congress & the WH have such a similar rule?

Davd Soul