What is a Rule 10b5-1 trading plan?

The short answer

A Rule 10b5-1 plan is a trading schedule an insider sets up in advance, so that later trades follow the plan and are not judged on what the insider knew on the day.

Official source: SEC fact sheet on the 2022 amendments to Rule 10b5-1 (Release 33-11138).

How it works

Insiders are not allowed to trade while they hold important information the public does not have. Rule 10b5-1 gives them a way to keep selling or buying: if they set up a written plan while they had no such information, trades made under that plan are protected against insider-trading claims.

The plan states the amounts and the dates, or a formula that decides them, and then the trades happen automatically.

The rules got stricter in 2023

Changes that took effect in 2023 added a waiting period before the first trade: for directors and officers, the later of 90 days after the plan is adopted or two business days after the company reports results for that quarter, up to 120 days. For other people the wait is 30 days. They also require good faith, limit overlapping plans and ask directors and officers to certify they had no such information when they adopted the plan.

How it shows up in filings

Since April 2023 a Form 4 has a box that says whether the trade was made under a Rule 10b5-1 plan, and filers often add a footnote about it. OQRO reads the footnotes, and treats a sale whose footnote mentions a Rule 10b5-1 or pre-arranged plan as set up in advance.

Why it matters when you read a sale

A sale under a plan was decided months earlier, so it says little about what the person thinks today. An unplanned sale is a choice made on the day. That is why OQRO leads with the unplanned ones and keeps planned and automatic sales in their own view.

A real example

The same NVIDIA sale, followed from the Form 4 to the company's quarterly report.

The Form 4 (sale on 21 January 2026) says in footnote 1 that it was made under a plan adopted on 19 September 2025, 124 days earlier.
NVIDIA's Form 10-Q for the quarter ended 26 October 2025, filed 19 November 2025, lists the same adoption in Item 5 (Other Information): Ajay Puri, EVP Worldwide Field Operations, adopted 19 September 2025, up to 1,000,000 shares, expiring 24 June 2026.
So the sale of 200,000 shares in January is one of the sales the plan allowed, and both filings can be checked against each other on sec.gov.

Since 2023 a plan leaves a trail in three places: the Form 4 box and footnote, the company's quarterly disclosure of plan adoptions by directors and officers, and the cooling-off rule that keeps a first trade away from the adoption date. A sale under a plan was decided at adoption, not on the day it appeared.

The record: NVIDIA Form 4, accession 0001347842-26-000004 (opened October 8, 2026)
The record: NVIDIA Form 10-Q for the quarter ended 26 October 2025 (Item 5) (opened October 8, 2026)

Common mistakes

Calling a planned sale "a decision made on the day". The plan fixes the terms when it is adopted; the date to look at is the adoption date, given in the Form 4 footnote and in the company's quarterly report.
Assuming the same waiting time applies to everyone. For directors and officers the cooling-off period is the later of 90 days after adoption or two business days after the quarterly or annual report for that quarter, capped at 120 days; for other persons it is 30 days.
Treating the box as proof that a plan is clean. The box says the filer intended the transaction to meet the rule's conditions; whether it does is a legal question the form does not answer.
Assuming the rule is new. Rule 10b5-1 dates from 2000; what changed in 2022 and 2023 is the waiting period, the good-faith condition, the limits on overlapping plans, the checkbox on Forms 4 and 5 and the quarterly disclosure.

See it on OQRO

From the blog

Sources

Related guides

This explains a public filing in plain words. It is not legal or investment advice.