Issue 4 - December 2007
Compensation in the form of restricted securities or stock options can be both a blessing and a burden for senior executives. Even as their shares appreciate in value, Securities and Exchange Commission (SEC) regulations and employer's rules on trading company shares may make it difficult for insiders to liquidate their holdings.
The good news is that through collaboration with Restricted Stock Systems, Inc. (RSS), Pershing offers access to a Rule 10b5-1 Trading Plan solution, which can help solve this dilemma. The most robust solution available today-and the only one to incorporate automatic trade execution-this new solution gives you the tools to manage your clients' Rule 10b5-1 trading plans with reliability and ease. The automatic trade execution component allows them to trade restricted shares, achieve portfolio diversification goals, and comply with all applicable regulations, ultimately, providing them with peace of mind, and you with a leg up on the competition.
Freedom from Illiquidity
In today's regulatory environment, corporations and their executives are acutely sensitive to the need to avoid even the appearance of insider trading. Apart from the risk of legal sanctions-including fines and jail sentences-the adverse publicity can be devastating on both a personal and corporate level.
"Armed with a properly-outlined Rule 10b5-1 trading plan, executives are able to sell their stock irrespective of blackout periods, trading windows, or limitations imposed by the company's insider-trading policies."
That doesn't mean that restricted securities should be locked up in your client's portfolios. Enacted in October 2000, SEC's Rule 10b5-1 provides some relief from insider trading restrictions by laying out explicit trading guidelines. Armed with a properly-outlined Rule 10b5-1 trading plan, executives are able to sell their stock irrespective of blackout periods, trading windows, or limitations imposed by the company's insider-trading policies. The plans also provide "an affirmative defense" to insider trading allegations.
More and more companies are requiring that potential insiders, including senior executives, board members, affiliates, and key shareholders, must adopt Rule 10b5-1 trading plans. Indeed, with such mandates now in place at 67 percent of all U.S. public corporations, Rule 10b5-1 trading plans represent a significant growth opportunity for you to capture a share of this market.
"Pershing's innovative Rule 10b5-1 Trading Plan solution strengthens your client offering and helps you deliver the highest levels of client service and satisfaction."
Adding Value-for You and Your Clients
The Rule 10b5-1 trading plan can be accessed through NetExchange Pro®, Pershing's web-based brokerage platform. Thus, functions that would otherwise have to be processed manually are streamlined and automated, enabling you to deliver enhanced service in less time. You can use it to customize plans to clients' trading specifications and total investment profile.
Other Key Benefits Include:
Pershing's innovative Rule 10b5-1 Trading Plan solution strengthens your client offering and helps you deliver the highest levels of client service and satisfaction. The latest offering in our suite of Corporate Executive Services, our innovative solution is integrated into NetExchange Pro and lets you access relevant market data, rules, filing requirements, and trading parameters. As a result of its integration into NetExchange Pro, Pershing's Rule 10b5-1 Trading Plan solution can be accessed anywhere, anytime-heightening your competitive edge.
For Professional Use Only.