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Stradling

Publications & Interviews

The Corporate Board
September 2018

John Cannon, chair of Stradling’s securities litigation and enforcement practice groups, authored an article, “The Illusion of Security in Stock Trading Windows,” for The Corporate Board, the leading journal of corporate governance for 39 years. Board members and directors of public companies can unintentionally engage in insider trading. Simple stock trades can sometimes be viewed as a scheme to defraud the company and can end up in litigation for years. Cannon notes that blackout periods and trading windows can create false illusions of security. Knowledge of material nonpublic information by directors and corporate insiders also puts them at risk. However, as Cannon states, there are ways to avoid trading scrutiny, such as trusts and 10b5-1 trading plans. The ultimate rule of thumb for directors of public companies is to never rely solely on blackout periods and trading windows when deciding if it’s safe to make a trade. Read the full article below.