By Cydney Posner
As reported in today's Washington Post, in remarks yesterday, SEC Enforcement Chief Linda Thomsen signaled that sales under 10b5-1 plans may be under scrutiny. She expressed concern that "executives are taking advantage of a legal safe harbor to sell their stock and profit before their companies report bad news. In 2000, the SEC passed a rule that allows corporate officials to develop a formal trading plan that sets out prearranged dates when they can sell shares without facing insider-trading allegations. But academic studies suggest that the rule may be a cover for improper activity, Thomsen said. 'We're looking at this hard,' she said. 'If executives are in fact trading on inside information and using a plan for cover, they should expect the 'safe harbor' to provide no defense.' "