Trading Plans and Insider Trading: The SEC Says the Plan Was Signed After the Bad News Arrived

Whether a trading plan provides a defense against insider trading turns on when the trading decision was made and what the insider knew then. A plan can provide a defense when an insider commits to trades before learning important nonpublic information and follows the Securities and Exchange Commission’s conditions. If you saw the customer warning arrive before the plan was signed, you may know the fact that the trading schedule leaves out.

This page follows the plan itself, from adoption and certification through changes and execution. The broader question of securities fraud evidence begins with the same connection between a public account and the records inside the business.

What a Trading Plan Changes

An advance trading plan fixes a trading decision before the insider learns information that could move the stock. It can direct purchases or sales, using specified amounts, prices and dates or a written formula that determines them. The Securities and Exchange Commission’s trading-plan rule also allows instructions that leave the insider no later say over how, when or whether trades occur. Anyone else making those decisions must also be unaware of the important nonpublic information.

The defense allows qualifying prearranged trades to continue even when the insider later learns important nonpublic information. That makes the adoption date consequential: the instructions must precede awareness of the information, and the actual trades must follow the arrangement. An offsetting trade or a departure from the agreed instructions can break that connection.

What Must Be True When the Plan Is Adopted?

The insider must adopt the plan before becoming aware of material nonpublic information and must act in good faith toward the arrangement. Material information is information important to an investor’s decision, such as a threatened loss of a major customer. Directors and covered officers must include a certification that they lack such information and are adopting the plan in good faith.

The federal waiting period between adoption and trading depends on the person’s role. Under the amendments effective February 27, 2023, the conditions are:

• Directors and covered officers: The later of 90 days after adoption or two business days after the company discloses the adoption quarter’s financial results in the specified report, with a maximum of 120 days after adoption. For domestic issuers, the relevant reports are Form 10-Q or Form 10-K; foreign private issuers use the specified annual or results reports.
• Other persons, excluding the issuer: A 30-day waiting period after adoption.
• The issuer itself: The amendments imposed no federal cooling-off period on the company’s own plan.

For individuals, the rule restricts overlapping open-market plans and generally allows only one qualifying single-trade plan within a twelve-month period. Limited exceptions include qualifying sales to cover tax withholding when compensation awards vest, with timing outside the insider’s control. If you see several arrangements, we look at who controls each one and what they authorize.

Why a Changed Trading Plan Starts the Clock Again

A change to a plan’s amount, price or trading dates counts as termination of the old arrangement and adoption of a new one. That brings the adoption conditions and applicable waiting period back into the picture. The same changes bring older plans under the amended rule.

Good faith also reaches conduct outside the trading instructions. The Securities and Exchange Commission’s final rule explains that an insider who uses material nonpublic information to influence the timing of company disclosures and benefit planned trades can lose the defense even when the plan was adopted in good faith. If you work on earnings releases or customer announcements, the instruction to move the announcement may be as revealing as the instruction to sell.

A cancellation or suspension raises the question of who directed it and why. The Securities and Exchange Commission distinguishes a company-directed cancellation outside the insider’s control from the insider’s own efforts to manipulate the arrangement. We examine the decision and the communications behind it alongside the original plan.

Ontrak and Acuitas Put the Adoption Date at the Center

The Securities and Exchange Commission alleged that Ontrak’s executive chairman used plans in the name of his investment vehicle, Acuitas Group Holdings, to sell stock after learning that Ontrak’s largest customer was likely to leave. Its complaint against the executive and Acuitas described plans adopted in May and August 2021.

Ontrak provided behavioral healthcare services through contracts with health plans. The complaint explains that its fees depended on how many of a customer’s members enrolled in Ontrak’s program. A customer reducing referrals therefore threatened the revenue behind the stock, even before a formal termination notice arrived.

The complaint alleged that the executive sought a broker willing to start selling immediately. The first broker required a waiting period, and its employee drew a line:

According to the SEC, the executive moved to another broker that would allow immediate selling and rejected that broker’s recommendation to wait. The May plan directed sales beginning the next business day. In the SEC’s account, the waiting period held firm until the account moved.

The Securities and Exchange Commission also alleged that the executive falsely represented in the May plan that he lacked material nonpublic information. The August plan carried the same representation after further warnings about the customer’s departure. On the day he established that second plan, the complaint says, a sales employee told him the customer was likely to terminate.

The Securities and Exchange Commission alleged sales of 641,357 shares and calculated at least $12,711,324 in avoided losses by comparing the sale values with the closing price after the customer termination became public. The agency alleged that the bad news came before the plans.

The rule in force during those alleged trades did not require a federal cooling-off period. The broker’s waiting policy was its own requirement, while adoption before awareness of material nonpublic information was already part of the federal defense. The complaint also described Ontrak’s policy, which specifically identified termination of a material agreement as important nonpublic information.

On August 7, 2026, the Securities and Exchange Commission announced that it and the defendants had filed an agreement to end its civil action permanently. It described the decision as an exercise of its discretion. We see a detailed accusation followed by a decision to walk away.

How Hard Is It to Prove Insider Trading?

Proving insider trading depends on connecting what the trader knew, the obligation to keep it confidential, the decision and the trade. With a trading plan, dated communications can show what the insider knew before signing, while the plan and broker records show what the insider instructed someone else to do. The comparison reaches the actual execution, later changes and the public announcement.

The Ontrak complaint shows why a customer-facing employee can matter to that comparison. The employee’s account of the customer relationship can be placed beside the executive’s certification and the broker’s instructions. Someone in finance or disclosure review may see another part of the sequence, as transaction records become accounting entries, estimates, financial statements and signed reports.

A Wisconsin Law Review paper, Insider Trading and the Integrity of Mandatory Disclosure, explains why the gap between knowing and announcing matters. The paper argues that scheduled reporting creates an opportunity to exploit significant information while the company is still analyzing and verifying it:

The paper identifies advance copies of required reports, and information that effectively reveals their contents, as particularly suspect. For an insider, that focuses the evidence on the unfinished earnings report, the customer update or the internal forecast that existed when the plan was adopted. We connect that business context to the instructions and trades it may explain.

What the Public Filing Reveals

Public disclosures can identify the plan’s adoption date and the transactions attributed to it. Forms 4 and 5 include a checkbox for transactions under an arrangement intended to qualify for the defense and require the plan’s adoption date. Periodic company disclosures identify directors’ and officers’ adoption or termination of arrangements and describe material terms, including duration and the aggregate number of securities, while excluding the trading price terms.

Those disclosures give an insider something concrete to compare with the internal plan and its versions. Company policies and acknowledgments add what the trader was told, while broker communications show the instructions actually given. In the Ontrak complaint, the Securities and Exchange Commission put the executive’s policy acknowledgments beside his representations and knowledge of the customer relationship.

Can You Report Someone for Insider Trading?

Yes, insider trading can be the subject of a report to the SEC. For suspected trading-plan abuse, we connect what you know about the information and the decision with the signed plan, communications and trades, then work with you on reporting the securities fraud. Eligible whistleblowers can share an SEC award of 10% to 30% of the qualifying money collected when the action results in more than $1 million in monetary sanctions.

You Know What Arrived Before the Signature

If you saw the customer warning, earnings information or changed instructions before the plan was signed, speak with our whistleblower experts about that sequence. We build the case with you and bring in securities fraud whistleblower lawyers who understand trading plans, information access and broker records. We stay beside you as your knowledge becomes a case the SEC can investigate.