The 2023 10b5-1 Amendments: 90-Day Cooling-Off and Good-Faith Certification

The SEC adopted amendments to Rule 10b5-1 in December 2022 that took effect February 27, 2023, and represented the most significant change to the rule since its 2000 adoption. The headline additions were a mandatory 90- or 120-day cooling-off period between plan adoption and first trade, a good-faith certification requirement for officers and directors, a prohibition on overlapping plans, a limit on single-trade plans, and new public-disclosure obligations. Together these changes raised the bar for what counts as a valid 10b5-1 affirmative defense against insider-trading allegations.

The practical effect: plans adopted before the amendments were grandfathered, but any plan adopted, modified, or terminated after February 27, 2023 falls under the new framework. Executives who rely on the defense cannot follow pre-2023 playbooks.

This article walks through each amendment and what it means in practice.

The 90-day cooling-off period for officers and directors

What the rule says

Section 16 officers and directors who adopt a 10b5-1 plan must wait at least 90 days, or two business days after the filing of the Form 10-Q or 10-K covering the quarter in which the plan was adopted, whichever is later. The maximum waiting period is capped at 120 days.

What this replaces

Before 2023, the rule had no mandatory cooling-off. Companies typically imposed policy-based cooling-off of 30 days, but this was discretionary. Executives could adopt a plan during an open window and begin trading almost immediately.

Why it matters

A 90-day minimum ensures that plan adoption happens far enough from information events to reduce the risk that the plan was set up based on material non-public information (MNPI). The 120-day ceiling covers the “two business days after 10-Q/10-K” branch when that falls close to quarter-end.

Timing example

Officer adopts a plan on March 15, 2025. Q1 10-Q is filed April 28, 2025. Two business days after is April 30, 2025. The later of (March 15 + 90 days = June 13) or (April 30, 2 business days post-filing) is June 13. First trade cannot occur before June 13.

If the plan were adopted June 15, 2025 instead: 90 days out is September 13. Q2 10-Q filed July 28. Two business days post-filing is July 30. Later is September 13. First trade can occur September 13 or later.

The 30-day cooling-off for non-Section-16 employees

What the rule says

Non-officer employees who adopt a 10b5-1 plan must wait at least 30 days before the first trade.

What this replaces

Previously, no mandatory cooling-off applied to non-officers either. Company policies varied, but the defense was theoretically available from adoption.

Why it matters

Consistency. The SEC wanted a floor for all plan holders, not only Section 16 reports. The 30-day period is shorter because non-officers generally have less access to MNPI, but it is still a floor no longer within company discretion to override.

The good-faith certification requirement

What the rule says

Officers and directors adopting a 10b5-1 plan must certify in writing that:

1. They are not aware of material non-public information about the company or its securities at the time of adoption; and
2. They are adopting the plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5.

The certification must be included in the plan documents.

Why it matters

The certification is evidence the SEC and prosecutors can use. A false certification is itself a potential securities-law violation. Executives who sign the certification without careful review of what they know face personal liability beyond the insider-trading allegation itself.

Practical effect

Legal and compliance teams at public companies now require formal MNPI-review sessions before plan adoption. Executives meet with general counsel, sign attestations about the absence of MNPI, and document the process. The certification raises the floor for plan adoption but also provides a clearer record of good faith.

The single-plan-at-a-time rule

What the rule says

Rule 10b5-1(c)(1)(ii)(D) limits each plan participant to one plan at a time. An insider cannot have two overlapping plans covering the same or different securities.

Narrow exceptions

• A “sell-to-cover” plan (to cover vesting tax withholding) is not counted against the single-plan limit
• A new plan can be set up after an existing plan has ended, subject to the cooling-off period
• Plans at different entities (separate issuers) are not counted together

What this replaces

Previously, an executive could adopt overlapping plans with different triggers or timing, giving them selective authority to execute under whichever plan proved convenient. The SEC viewed this as undermining the spirit of the defense.

Practical effect

Plan design now requires upfront alignment: one plan that covers all intended sales for the relevant period. See the single-plan article for the nuance.

The single-trade-plan limit

What the rule says

An insider can rely on the single-trade 10b5-1 defense only once per 12-month period. A “single-trade plan” is one that calls for a single transaction rather than a series.

What this replaces

Previously, an executive could set up multiple single-trade plans across the year. The SEC saw this as effectively equivalent to real-time trading decisions disguised as plan-based trades.

Practical effect

If you want to sell $5M in December, you set up one single-trade plan with the required cooling-off. You cannot set up a second single-trade plan in March for another event. Multi-trade plans (fixed-share, fixed-dollar, limit-price with multiple executions) are not limited to one per year.

Public disclosure requirements

Item 408(a) of Regulation S-K

Public companies must disclose in their 10-Q and 10-K filings:

• Each 10b5-1 plan adopted by an officer or director during the quarter
• Each plan modified or terminated during the quarter
• The adoption/termination dates, duration, and aggregate number of securities subject to the plan
• A checkbox attestation that each plan satisfies Rule 10b5-1(c)(1)

Item 402(x) of Regulation S-K

Additional disclosure is required for option grants made shortly before (within 4 business days before or 1 business day after) release of MNPI. This is the “spring-loaded grants” provision.

Why it matters

Public visibility into every plan adoption changes the PR environment. An executive adopting a plan two weeks before negative earnings guidance creates an obvious pattern for observers. The reputational cost of plan timing is higher than under the old private-filing regime.

Good-faith operation, not just good-faith adoption

What the rule says

The defense requires the plan to be operated in good faith, not just adopted in good faith. Changing the plan under circumstances that suggest opportunism can defeat the defense.

Examples of bad-faith operation

• Cancelling the plan immediately before a negative announcement
• Modifying the plan in ways that accelerate sales ahead of bad news
• Operating the plan while actively directing broker decisions that go beyond the plan’s terms

Practical effect

Modifications and terminations require fresh cooling-off periods. See the modification-termination article.

What the amendments do not change

The basic affirmative defense

Rule 10b5-1(c)(1) still provides an affirmative defense if:

1. The plan specifies the amount, price, and date of trades (or an algorithm for determining these)
2. The plan was adopted in good faith while not in possession of MNPI
3. The plan is not a plan or scheme to evade Rule 10b-5

Broker discretion

Plans can still delegate discretion to the broker within clearly defined parameters (fixed-dollar amounts, limit prices, date windows).

Pre-2023 grandfathering

Plans adopted before February 27, 2023 are grandfathered under the pre-amendment rules. Modifications to grandfathered plans generally bring them under the new framework.

Practical adoption checklist

Before adopting a plan post-2023:

1. Confirm no MNPI in your possession at adoption
2. Schedule MNPI-review session with general counsel
3. Sign good-faith certification
4. Adopt during an open window
5. Calculate 90/120-day cooling-off end date
6. Ensure no other 10b5-1 plans are active
7. Confirm single-trade plans haven’t been used in the last 12 months if you’re using a single-trade plan
8. Review Item 408(a) disclosure timing with company counsel

Frequently asked

Does the cooling-off apply to plan modifications?

Yes. A modification that changes the amount, price, or timing of trades is treated as a new plan. Fresh cooling-off applies.

What counts as a modification?

Changes to the trading algorithm, pricing formulas, volume limits, or duration. Mere administrative changes (e.g., correcting the broker contact information) do not count.

Can I terminate the plan early?

Yes, but you lose the defense for subsequent trades. If you want to trade under a new plan after termination, fresh cooling-off applies.

What about plans at private companies?

Rule 10b5-1 is an SEC rule. Private-company secondary trades don’t directly implicate the rule. Some pre-IPO companies voluntarily adopt 10b5-1-style programs ahead of going public to establish a track record.

Does the 90-day rule apply to sell-to-cover plans?

The single-plan exception for sell-to-cover plans exists (you can run a sell-to-cover plan alongside a discretionary plan), but the cooling-off period still applies to both.

What happens if I trade outside the plan terms?

Any trade outside the plan terms is not protected by the affirmative defense. You are exposed to standard insider-trading analysis for that trade.

Are the amendments retroactive to existing plans?

No. Plans adopted before February 27, 2023 are grandfathered for their original terms. Modifying or terminating grandfathered plans typically brings them under the new framework for post-modification actions.

Next step

If you are a Section 16 officer or director considering a 10b5-1 plan, start the adoption process at least 120 days before you want to trade. Walk through the certification with general counsel, document the MNPI review, and model your first-trade date against both the 90-day and 10-Q/10-K branches. Good-faith compliance with the 2023 amendments is the difference between a valid affirmative defense and a best-efforts argument that may not hold up in an enforcement action.