Topic: Rule 10b-5

SEC Adopts New Restrictions on 10b5-1 Plans,‎ Related Disclosure Requirements and Section 16 Filing Changes

On December 14, 2022, the SEC unanimously adopted cooling-off periods and other changes to how plans adopted under Rule 10b5-1 (“10b5-1 Plans”) will work going forward.  Executive officers and directors of public companies frequently use 10b5-1 Plans to conduct sales of their company’s stock at a time when they have material non-public information (“MNPI”) about the company or its securities, which is permitted if they entered into the plan at a time that they did not have MNPI and gave up control over the sales.

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Charges Against Nikola Founder Provide Reminder to Use Caution in All Public Statements and Offer Governance Lessons

On July 29, 2021, both the SEC and the U.S. Attorney for the Southern District of New York announced charges against Trevor Milton, the founder, former CEO and former executive chairman of Nikola Corporation, a company engaged in the development of electric trucks. The complaint and indictment allege a series of misleading and inaccurate public statements by Milton on social media and elsewhere leading up to and after the company’s merger with a special purpose acquisition company (SPAC) through which Nikola became a public company, which included related private placements (PIPEs).

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