Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Option Granting Practices and exploits -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (68)	10/28/2006 12:38:57 PM
From: RockyBalboa	Respond to of 165

Thanks GP for posting that stuff. Automatic trading plans are a white spot here; little is known about the mechanics of such trade. I often assumed it is a sort of constant stock selling plan but from your post seems different in particular with the discretion issues - discretion over trading decisions. What about the specifications of a trading plan? -Insiders cede control over their actual trading to an outside advisor -insiders and/or the advisor define the mechanics of the plan: ie trade a certain amount if stock is ahead of a price target otherwise pass. -adjust share amounts depending on price -initiate/increase sales a certain time after a stock options grant.... "Thomson's LoPresti says investors tend to ignore such trades, assuming they are out of the control of executives. But that, he argues, is a mistake. " Thats what I thought too not considering the dark side of it. It is not even a issue related to the discretion of such a plan; even the information about plan details (ie, timing of share sales) can be valuable input for company insiders to adjust their information policy. Here are lots of automatic sales: I wonder how they are reported as many different prices are reported on one day in the month as it seems: de.finance.yahoo.com

To: Glenn Petersen who wrote (68)	10/28/2006 12:52:01 PM
From: RockyBalboa	Respond to of 165

Here is an example of such a plan (for PACR): ---------------------- Mr. Orris' pre-arranged trading plan will be adopted in accordance with guidelines specified in Rule 10b5-1(c) of the Securities Exchange Act of 1934 during an open trading window under Pacer's securities trading policy and is expected to extend by its terms through October 30, 2007, with sales made from time to time at the sole discretion of an independent broker, subject to a minimum share price specified in the plan. To the extent required by SEC rules, sales under the plan will be reported publicly on Forms 144 and 4. Except to the extent required by law, Pacer does not undertake to report the adoption of trading plans by its directors, officers or employees, or to report modifications, terminations, transactions or other activities under the Orris plan. ABOUT SEC RULE 10b5-1(c) -- Rule 10b5-1(c) allows corporate insiders who are not then in possession of material, non-public information to establish pre-arranged written plans to buy or sell a specified number of shares over a set period of time. The specified number may be determined by a formula or at the discretion of an independent third party. These trading plans enable insiders to gradually diversify their investment portfolio by spreading stock sales over a longer time period than would otherwise be the case under the limited trading windows that follow the release of financial information, thereby reducing the impact of their sales on the market. In addition, the rule is intended to permit sales by insiders in a manner that avoids concerns about whether they have material, non-public information at the time shares are sold. Once a plan is established, the insider retains no discretion over sales under the plan, and the pre-arranged trades can be executed through a broker at later dates without regard to whether the insider has subsequently become aware of material, non-public information.

To: Glenn Petersen who wrote (68)	1/2/2007 9:50:02 PM
From: RockyBalboa	Respond to of 165

CFC also has such a plan. Here the PR explicitly mentions the suitability of trades made under such a plan even in the case of non-public information available to the seller. Countrywide Financial Pres. Sells Shares Tuesday January 2, 2:30 pm ET Countrywide Financial President and Operations Chief Exercises Options for 14,000 Shares NEW YORK (AP) -- The president and chief operating officer of Countrywide Financial Corp., a lender of residential mortgages, exercised options for 14,000 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing Friday. In a Form 4 filed with the SEC, David Sambol reported he exercised the options on Thursday for $14.69 apiece and then sold all of them the same day for $42.85 apiece. The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material nonpublic information. Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction. Countrywide is based in Calabasas, Calif.