the us securities and exchange commission sec is closing loopholes that previously allowed company insiders to get away with illicit insider trading what happened the sec is adopting amendments to rule 10b51 a 2002 regulation that provided defenses for issuers and insiders against insider trading liability rule 10b51 allowed insiders to execute preplanned trades on the basis of preestablished criteria even if the insiders later became aware of material nonpublic information related link market performance on valentines day this time itll be different and inflation is why why its important company insiders often have the best sense of the health of a company and where business is headed the phrase “insider trading” has a negative connotation to many americans but its perfectly legal assuming all trades are publicly disclosed to the sec and are not based on specific nonpublic information company insiders are free to buy and sell a stock as they please provided they fill out the proper paperwork in a timely manner notifying other investors of what they are doing unfortunately academic research has shown insiders were abusing the protections rule 10b51 provided by selling shares of stock less than a month after establishing the plan or implementing the plans right before a major stock catalyst such as an earnings announcement some company insiders were even adopting multiple plans and then later canceling the ones that wouldnt be profitable to execute the rule amendments will make it more difficult for company insiders to take advantage of the protections rule 10b51 provided to effectively trade on nonpublic information the new rule changes will be implemented for most uslisted stocks on april 1 benzingas take insider trading laws are made to ensure company insiders play by the same rules in the market that every other investor does the new changes to rule 10b51 will help maintain the integrity of the market and make sure the tables arent tilted against the average retail investor