In the year 2006, David Zucker, chief executive officer of Midway Games, came under fire for selling a significant amount of Midway stock only weeks before a precipitous drop in the share price of the company. 10b5-1 plans, named following the Securities and Exchange Commission rule which resulted in their development, provided a systematic way of corporate executives who were habitually in the possession of material nonpublic information to engage in the sale of company stock.
When implemented properly, 10b5-1 plans provide a safe haven that shielded these people under insider trading laws from liability by showing that certain safeguard states were in place at the time the trades were executed. On the other hand, the circumstances under which their plans were carried out by both executives led to an outcry from shareholders the programs were being abused. Regulators and shareholders were left to decide whether the two guys carried out their 10b5-1 plans in good faith whether their actions amounted to a refined type of prohibited insider trading or as required.
PUBLICATION DATE: November 09, 2007 PRODUCT #: CG10-PDF-ENG
This is just an excerpt. This case is about LEADERSHIP & MANAGING PEOPLE
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