Rule 10b5-1 of the Exchange Act provides an affirmative defense to Rule 10b-5 insider trading liability in circumstances where a trade was not made on the basis of material non-public information. Rule 10b5-1 plans are developed in compliance with Rule 10b5-1 and set out restrictions for purchases or sales of equity securities that do not permit the person to exercise investment discretion over how, when, or whether to make purchases or sales once the plan is in place. A Rule 10b5-1 plan permits directors, officers, and other insiders to sell stock without risk of insider trading liability because the 10b5-1 plan is put in place at a time when they are not in possession of material non-public information and the trades are later carried out without their further action.

For more information, see Standard Document, Corporate Policy on Insider Trading.