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The temporary sales of internal corporations cause concern


Corporate executives have saved millions of dollars by selling large shares in stock before operations, according to a new study showing that corporate executives take money in the event of a disaster.

When some companies use pre-arranged trading strategies to quickly sell $ 50m or more in a single day, the company’s stocks traded at 3.19% in the next month, and 5.75% in the next six months, according to a study by Daniel. Taylor, professor of accounting at Wharton School and director of his forensic analytics lab.

The study looked at those who live within the shareholding organizations within 60 days after establishing a system called 10b5-1.

The plan allows managers, committee members and all other vendors to sell shares at a predetermined time and cost. They are designed to serve as a safe haven from trade infringement by setting up stock exchanges. But critics say the idea could be a time to start a stock market where it is appropriate for leaders.

Taylor is one of the students who is said to have found red flags in retail companies within the past few months. Their research is starting to gain interest as the U.S. Securities and Exchange Commission begins to make laws to show transparency in how employees work.

In June, Gary Gensler, chair of the SEC, He said asked council staff to enact a law to “revise” 10b5-1 rules that were finalized in 2000.

Employees in the industry often handle confidential, anonymous matters and are highly paid in stock – a combination that “poses a risk that financial markets may be affected by internal information,” said Caroline Crenshaw, SEC Commissioner, in an interview.

He shot Gensler’s call for a new 10b5-1 rule, and they say in the past that companies have to explain when a system is established.

“The biggest piece on this 10b5-1 concept is reliance on markets [and] knowing that this is a good way and that employers are not just making money for themselves, ”he said.

Big stocks in Taylor’s models, $ 50m or more, showed a much higher share price over the next month.

With 10b5-1 protection protected from insider trading, “the SEC gave the guards a shield, and they used it as a sword,” Taylor said.

The impact of the major stock market duration was highlighted last year Albert Bourla, Pfizer’s chief executive, also acquired shares the same day the company announced the good news of the Covid-19 vaccine.

The increase in the price of Pfizer shares resulted in Bourla’s $ 5.6m reward. The company said that at the time the sale of shares was based on a 10b5-1 plan that had been drafted.

After the sale, the film crew, including Elizabeth Warren, a Massachusetts Democrat, called on the SEC to change the disclosure rules. “Misuse of 10b5-1 plans seems to be causing some problems for investors,” Warren and two colleagues He said in a letter to the SEC in February.

Research shows that companies start selling shares to executives when they have a good story to tell and the share price goes up.

Joshua Mitts, a law professor at the University of Law, wrote last year that found that the amount of dollars sold as part of the 10b5-1 plan was high when the good news was revealed. The medical sector was selling more and more when the company revealed the good news, he said.


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