Rule 10b5-1 After 2022: How Founder Family Offices Sell Concentrated Stakes

The Sale Is Now Part of the Disclosure Record

For two decades after the SEC adopted Rule 10b5-1 in August 2000, a founder who wanted to diversify a concentrated stake could sign a written trading plan with a broker, start selling almost immediately, and leave the market largely unaware of the plan until Form 4s appeared. The rule offered an affirmative defense to insider trading liability for trades made under a plan adopted while the insider was not aware of material nonpublic information (MNPI). It did not offer much structure: plans could be adopted and cancelled quietly, stacked on top of one another, or written to execute a single block soon after signing.

That changed on December 14, 2022, when the Commission adopted Release No. 33-11138, "Insider Trading Arrangements and Related Disclosures," effective February 27, 2023. The amendments added cooling-off periods, a limit on single-trade plans, restrictions on overlapping plans, a good-faith condition that lasts for the life of the plan, and director and officer certifications. They also pulled plan activity into the issuer's periodic reports and onto Forms 4 and 5.

For a founder family office, a liquidity program for a concentrated position is now partly a disclosure event and partly a calendar problem. The family member on the board faces one set of conditions; the family's trusts, partnerships and holding companies may face another; and all of those vehicles may count toward the same Rule 144 volume limit and the same Section 13(d) group. This analysis sets out how those layers fit together, what the filings now reveal, and what advisers and capital-markets desks should check before a founder family's first trade under a new plan.

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Part I: The Amended Rule 10b5-1, Condition by Condition

Rule 10b5-1(c)(1) is an affirmative defense; a seller who wants to rely on it must satisfy every condition. Five additions matter most for concentrated-stake sellers.

Cooling-off periods

Directors and officers. No trade may occur under a new plan until the later of (1) 90 days after adoption, or (2) two business days after the issuer discloses its financial results in a Form 10-Q or Form 10-K for the fiscal quarter in which the plan was adopted, subject to a maximum of 120 days after adoption.

Everyone else other than the issuer. The cooling-off period is 30 days after adoption. That category can include a founder who has left the board, family members who are not insiders, and the family's trusts and holding entities, depending on the facts.

In practice, a founder who is still an officer or director will usually see a first trade date roughly a quarter after adoption, while a family partnership that is not itself a director or officer can begin after 30 days. Desks running a program across several vehicles can therefore see staggered start dates for what the family treats as one diversification decision.

Certification for directors and officers

Directors and officers must include a representation in the plan certifying, on the adoption date, that they are not aware of MNPI about the issuer or its securities, and that they are adopting the plan in good faith and not as part of a plan or scheme to evade Rule 10b-5.

Good faith for the life of the plan

The amended rule requires that the person "has acted in good faith with respect to" the plan, not merely that the plan was entered into in good faith. The SEC said this extends the concept through the duration of the plan, and gave an example: an insider who, while aware of MNPI, induces the issuer to time a disclosure so that the insider's plan trades become more profitable would not be entitled to the defense. The release added that issuer-directed cancellations outside the insider's control or influence may not, by themselves, implicate the condition. A founder who chairs the board is closer to disclosure timing than almost any other shareholder, which is exactly the proximity this condition addresses.

Overlapping plans

Persons other than the issuer generally may not rely on the defense while they have another outstanding plan that would qualify for the defense for open-market purchases or sales of the issuer's securities. There are three carve-outs:

• Multiple brokers, one plan. Separate contracts with different broker-dealers may be treated as a single plan if together they meet the rule's conditions.
• One later-commencing plan. A person may adopt one later plan whose trading cannot begin until all trades under the earlier plan are completed or expire. The later plan loses the defense if its first trade falls within the "effective cooling-off period," measured as if it were adopted on the date the earlier plan was terminated.
• Sell-to-cover. A plan that only authorizes sales necessary to satisfy tax withholding on vesting of a compensatory award, where the insider does not otherwise control timing, does not count.

The adopting release illustrates the later-commencing rule with a non-director, non-officer whose existing plan's last scheduled trade is May 31, 2023, and who on May 1 adopts a second plan with a first trade on June 1. If the first plan is terminated on May 15, the second plan loses the defense, because June 1 is within 30 days of May 15; a July 1 start could still qualify. For a family entity in the 30-day category, rolling one plan into the next is a scheduling exercise, not a simple renewal.

Single-trade plans, modifications and legacy plans

One single-trade plan per 12 months. Persons other than the issuer may rely on the defense for a plan designed to execute the full amount as a single transaction only once in any 12-month period. Qualified sell-to-cover plans are excluded.

Modifications are new plans. Any change to the amount, price or timing of trades, including a broker substitution that changes the price or date of execution, is treated as a termination plus a new adoption, which restarts the cooling-off period.

Pre-2023 plans. The SEC said the amendments do not affect the defense under a plan entered into before February 27, 2023, unless the plan is modified after that date, in which case the amended rule applies to the modified arrangement.

Timeline of the rule changes

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Part II: What the Market Now Sees

Item 408(a): the quarterly plan report

Item 408(a) of Regulation S-K requires the issuer to disclose in its Form 10-Q and Form 10-K (for the fourth quarter, in the annual report) whether any director or officer, as defined in Rule 16a-1(f), adopted or terminated a Rule 10b5-1 trading arrangement or a "non-Rule 10b5-1 trading arrangement" during the quarter, with a description of the material terms other than price, such as the person's name and title, the adoption or termination date, the duration, and the aggregate number of securities covered. The disclosure is tagged in Inline XBRL.

The gap that matters for family offices. Item 408(a) covers directors and officers. By its terms it does not cover a shareholder whose only Section 16 status is ownership of more than 10%. A family holding company or trust that is a 10% holder, with no board seat or officer title, can adopt a plan that the issuer does not report under Item 408(a). Its trades still surface on Form 4 with the checkbox, and on Form 144 if it is an affiliate selling under Rule 144, but the plan's size and window are not pre-announced in the 10-Q.

Item 408(b) and Exhibit 19

Item 408(b) requires the issuer to disclose whether it has adopted insider trading policies and procedures reasonably designed to promote compliance with insider trading laws and listing standards, to explain why if it has not, and to file the policies as an exhibit (Exhibit 19). For a family office, Exhibit 19 is the quickest public source for the issuer's blackout windows, pre-clearance rules and any company-specific constraints on plans. The same release added Item 402(x), which requires disclosure of option awards made close in time to the release of MNPI.

The Form 4 and Form 5 checkbox

Section 16 filers reporting on or after April 1, 2023 must indicate by checkbox whether a transaction was made under a plan "intended to satisfy the affirmative defense conditions" of Rule 10b5-1(c), and provide the plan's adoption date. Section 16 covers directors, officers and beneficial owners of more than 10% of a registered equity class, and by statute Form 4 is due before the end of the second business day after the trade. So a 10% family holding company outside Item 408(a) still produces a checkbox-flagged public record of every plan sale within two business days.

Gifts move to Form 4

Before the amendments, bona fide gifts could be reported on Form 5, due within 45 days after the issuer's fiscal year end, which the SEC noted could mean reporting more than a year after the gift. Now dispositions by bona fide gift must be reported on Form 4 within two business days. Three points from the adopting release matter to founder families:

1. Gifts can raise insider trading issues. The SEC restated that a donor violates Section 10(b) by gifting securities in breach of a duty of trust and confidence while aware of MNPI, when the donor knew or was reckless in not knowing that the donee would sell before the information became public.
2. Gifts can go into a plan. The release clarified that the Rule 10b5-1(c)(1) defense is available for bona fide gifts.
3. No carve-out for family vehicles. The SEC declined a commenter's request to limit the gift requirements to gifts to charities affiliated with the insider, and declined to adopt an exception for gifts to estate planning vehicles controlled by the donor, noting that a donee entity obtaining a high sales price shortly after a donation can benefit the donor. It also noted that transactions that change only the form of beneficial ownership, without changing pecuniary interest, are exempt from Section 16 reporting under Rule 16a-13.

What the filings show: two documented founder programs

The new disclosures have made founder liquidity programs visible in ordinary SEC filings. Two examples, drawn only from company filings and major-outlet reporting:

Each filing describes a plan intended to satisfy Rule 10b5-1(c) and states a maximum, not a commitment to sell. On execution, USA Today reported on February 22, 2024 that Bezos had completed the sale of 50 million shares under the November 2023 plan, with the series of sales netting about $8.5 billion and beginning on February 7, 2024.

Two things stand out. First, the plan's size and window became public in the periodic filing before the sales appeared on Form 4. Second, the sequence shows how a founder's diversification can run as a series of separately adopted plans, each with its own cooling-off period and each disclosed in turn. The filings do not explain the purpose of the sales, and nothing should be inferred beyond what they state.

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Part III: Rule 144 and Form 144 for Affiliate Sellers

Rule 10b5-1 addresses insider trading liability; it does not register shares. A founder or family entity that is an affiliate, selling in the open market without a registration statement, typically relies on Securities Act Rule 144, which has its own limits.

Who is the affiliate, and who is the "person"

Rule 144(a)(1) defines an affiliate as a person that directly or indirectly controls, is controlled by, or is under common control with the issuer. There is no numerical threshold; control turns on facts and circumstances. Rule 144(a)(2) then treats the following as part of the same "person" for whose account securities are sold:

• relatives or a spouse (or the spouse's relatives) who share the same home;
• any trust or estate in which those persons collectively hold 10% or more of the beneficial interest, or serve as trustee, executor or similar; and
• any organization (other than the issuer) in which those persons collectively own 10% or more of a class of equity or of the equity interest.

That is why a founder family's Rule 144 analysis cannot be run vehicle by vehicle.

The volume limit and aggregation

Where the issuer has been reporting for at least 90 days, restricted securities must be held at least six months (otherwise one year), which is rarely the binding constraint for a founder of a mature company. Volume usually is. Under Rule 144(e)(1), an affiliate's sales in any three-month period may not exceed the greatest of 1% of the class outstanding as shown in the issuer's most recent report, or the average weekly reported trading volume during the four calendar weeks before the Form 144 filing (or the comparable volume reported under a transaction reporting or national market system plan).

Rule 144(e)(3) then adds others' sales to the affiliate's own:

• Donees. A donee's sales are aggregated with the donor's for six months after the gift (one year for non-reporting issuers).
• Trusts funded by the settlor. Sales by a trust that acquired securities from its settlor are aggregated with the settlor's over the same window.
• Persons acting in concert. When two or more affiliates or other persons agree to act in concert to sell, their sales in any three-month period are aggregated.

Sales registered under the Securities Act, made under Regulation A, in non-public Section 4 transactions, or offshore under Regulation S are excluded. Because registered sales sit outside the Rule 144 count, a registered secondary offering is the usual alternative when a tranche is too large for the volume limit.

Form 144

Affiliate sales must be made through brokers' transactions, directly with a market maker, or in qualifying riskless principal transactions, without soliciting buy orders. Under Rule 144(h), an affiliate files Form 144 if sales in any three-month period exceed 5,000 shares or $50,000 in aggregate sale price, concurrently with placing the order. Three post-2022 points matter:

1. EDGAR is mandatory. The SEC adopted electronic filing of Form 144 for reporting-issuer securities on June 2, 2022, with an April 13, 2023 compliance date. Each filer needs EDGAR access, and the SEC's 2022 announcement noted that applications for access are not automatically granted.
2. Later filing hours. Release 33-11159 moved the Form 144 EDGAR deadline from 5:30 p.m. to 10 p.m. Eastern, effective March 20, 2023.
3. The plan representation. Form 144 includes a representation indicating whether the filer has adopted a written trading plan or given instructions to satisfy Rule 10b5-1, making it a third public record of plan use alongside Item 408(a) and the Form 4 checkbox, and one that reaches affiliate sellers who are not directors or officers.

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Part IV: How Family Offices, Trusts and Entities Are Treated

Founder liquidity rarely sits in one name. Shares may be held directly, in a revocable trust, in trusts for children, and in a family partnership or LLC, with the family office serving all of them. Each regime attributes ownership differently.

The family office itself

Single-family offices commonly rely on the family office exclusion from the Investment Advisers Act in Rule 202(a)(11)(G)-1, adopted on June 22, 2011 in Release IA-3220. Two consequences follow. The Schedule 13G qualified institutional investor category in Rule 13d-1(b) is tied to listed institution types, including advisers registered under Section 203 of the Advisers Act or state law, so an unregistered family office generally looks to the passive or exempt investor routes instead. And the office can still be an institutional investment manager under Section 13(f): with investment discretion over at least $100 million of 13(f) securities, it files Form 13F within 45 days after each quarter. Wealthmetrica's family office directory is a starting point for identifying the offices behind those filings.

Section 16 attribution

For the 10% test, Rule 16a-1(a)(1) uses Section 13(d) beneficial ownership. Once someone is an insider, Rule 16a-1(a)(2) looks to pecuniary interest, the opportunity to profit or share in any profit from a transaction. For founder families:

• Household members. Securities held by immediate family sharing the same household are an indirect pecuniary interest, subject to a rebuttable presumption. Immediate family under Rule 16a-1(e) includes children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, siblings and in-laws, including adoptive relationships.
• General partners. A general partner's interest is its proportionate share, the greater of its share of profits or its capital account.
• Trusts (Rule 16a-8). A trust that is itself a 10% owner is subject to Section 16. The trustee reports for the trust and is attributed a pecuniary interest where, among other things, a beneficiary is a member of the trustee's immediate family. A beneficiary who shares investment control reports alongside the trust. A settlor who can revoke the trust without another's consent is attributed the holdings instead of the trust, unless the settlor neither exercises nor shares investment control.

Section 16(b) separately lets the issuer recover profits from any purchase and sale within less than six months, regardless of intent, and a Rule 10b5-1 plan does not change that exposure. A family selling through one vehicle while another vehicle attributed to the same insider is buying needs a short-swing review across all of them.

Section 13(d) and 13(g): deadlines and groups

Holders of more than 5% of a covered class file Schedule 13D or 13G. After the October 10, 2023 amendments (Release 33-11253, effective February 5, 2024):

• An initial Schedule 13D is due within five business days (previously 10 days), and amendments within two business days.
• Qualified institutional and exempt investors file an initial 13G within 45 days after the quarter in which they cross 5%; passive investors under Rule 13d-1(c), who must hold less than 20% without a control purpose, file within five business days.
• 13G amendments are generally due 45 days after the quarter in which a material change occurred, with faster deadlines for qualified institutional and passive investors that cross 10% or move by 5%.

Founders who held their stake before the class was registered are a common Rule 13d-1(d) case. SEC staff guidance (C&DI 101.01, addressing a class registered on Form 10 under Section 12(g)) says such a holder who has not acquired more since registration reports on Schedule 13G under Rule 13d-1(d), within 45 days after the end of the calendar quarter in which the class was registered. If the holder later acquires more than 2% of the class within a 12-month period, Rule 13d-1(d) is no longer available (the C&DI cites Section 13(d)(6)(B)), and the holder must evaluate whether another Schedule 13G basis applies or whether Schedule 13D is required.

The group concept is where family structures get complicated. Under Sections 13(d)(3) and 13(g)(3), persons acting together to acquire, hold, vote or dispose of securities are treated as one person. The SEC did not rewrite the definition in 2023, but its guidance said a group does not depend solely on an express agreement and that concerted action can suffice, depending on the facts. Coordinated sales across siblings' trusts, or a joint block with co-founders, are the scenarios to test, because a group finding can change the schedule, the deadlines and, at 10%, who is a Section 16 insider.

Entities and the two Rule 10b5-1 defenses

The 2022 conditions were added to the Rule 10b5-1(c)(1) defense, which any seller can use, including entities; a family LLC that is not a director or officer faces the 30-day cooling-off period, the overlapping and single-trade limits and the good-faith condition. Rule 10b5-1(c)(2) offers a separate defense only for non-natural persons, which requires showing that the individual making the investment decision was not aware of the MNPI and that the entity had reasonable policies and procedures to prevent insider trading. Where the decision-makers include a sitting director or officer, that showing may be hard to make.

Foreign private issuers: the 2026 change

Directors and officers of foreign private issuers were historically exempt from Section 16. The Holding Foreign Insiders Accountable Act, enacted December 18, 2025 in the fiscal 2026 National Defense Authorization Act, changed that; the SEC adopted implementing rules on February 27, 2026, and both took effect on March 18, 2026. These insiders now file Forms 3, 4 and 5, while 10% holders of foreign private issuers remain outside Section 16(a) and the insiders remain exempt from Section 16(b) and 16(c).

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Part V: The Enforcement Backdrop

According to the Department of Justice, Terren Peizer, former CEO and chairman of Ontrak Inc., was convicted by a jury in June 2024 of one count of securities fraud and two counts of insider trading, and on June 23, 2025 was sentenced to 42 months in prison, fined $5.25 million and ordered to forfeit more than $12.7 million. The DOJ called it the first insider trading prosecution based exclusively on the use of Rule 10b5-1 trading plans and said the scheme avoided more than $12.5 million in losses.

The DOJ said Peizer adopted plans in May and August 2021, before the amendments, after learning negative information about Ontrak's largest customer; refused to observe a cooling-off period despite warnings from brokers, a senior Ontrak executive and attorneys; and began selling on the next trading day after each plan was set up. His status has since changed: the DOJ's case page states that on January 16, 2026 Peizer was granted a full and unconditional pardon, excepting any fines or restitution already paid, and Reuters reported in August 2026 that the SEC was moving to dismiss its parallel civil insider trading case against him. The pardon does not alter the pattern the DOJ described, plan adoption after receipt of negative information followed by trading on the next trading day, which is the pattern the 2022 cooling-off periods now address directly.

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Part VI: A Working Checklist for Advisers and Capital-Markets Desks

These are starting points; whether a particular vehicle is an affiliate, insider or group member turns on documents and facts, which is a question for securities counsel. Questions commonly worked through before adoption:

1. Who is the "person"? List every account, trust and entity Rule 144(a)(2) folds into the founder and every vehicle Section 16 attributes to them.
2. Which plans already exist? The overlapping-plan rule applies per person relying on the defense.
3. Single trade or program? Non-issuers get one single-trade plan per 12 months; a large block may suit a registered secondary better.
4. Is a gift coming? Insider gifts appear on Form 4 within two business days, can sit inside a plan, and donee sales can count toward the donor's Rule 144 volume.
5. What will the 10-Q say? If the founder is a director or officer, the plan's date, duration and maximum size will be published at the next periodic report.
6. Are EDGAR codes ready, and what does Exhibit 19 require? Rarely used family entities are where codes lapse, and issuer policies may add pre-clearance or longer waiting periods.
7. Who could be a group? Coordinated sales with siblings, co-founders or early investors should be tested under Sections 13(d)(3) and 13(g)(3) and Rule 144(e)(3)(vi).

On the regulatory horizon, the SEC's 2026 regulatory agenda, released in July 2026, carries over an item to consider reproposing amendments to Rule 144 "to increase instances in which the safe harbor would be available," with a tentative October 2026 target, according to a July 2026 summary by Bryan Cave Leighton Paisner. The thresholds described above reflect the rules in effect as of October 2026.

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The Intelligence Implication

The 2022 amendments turned founder selling from a private arrangement between an insider and a broker into a sequence of public data points: the plan's adoption in the issuer's 10-Q or 10-K, the Form 144 with its plan representation, the checkbox-flagged Form 4, the gift reported within two business days, and the Schedule 13D or 13G amendment as the stake declines. For an RIA or private bank covering a founder family, or a capital-markets desk competing for the next block, that sequence is both a compliance map and an early indication that liquidity is scheduled.

It also exposes the structure behind the founder. The names on Forms 4 and 144 are often the trusts, partnerships and holding companies a family office administers, and those vehicles are where post-sale capital tends to land. Reading the filings together, rather than one form at a time, shows which vehicles are selling, which are giving and which may need reinvestment, without speculating about anything the filings do not say. Wealthmetrica's RIA directory and data methodology describe the public filings our adviser and family office data draws on.

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Key sources

• SEC, Release No. 33-11138, Insider Trading Arrangements and Related Disclosures, and fact sheet (2022)
• 17 CFR 240.10b5-1; 17 CFR 229.408 (Item 408 of Regulation S-K)
• 17 CFR 230.144 (Rule 144); SEC Release No. 33-11159, Extending Form 144 EDGAR Filing Hours (2023); SEC Form 144 electronic filing announcement (2022)
• 15 U.S.C. 78p (Exchange Act Section 16); 17 CFR 240.16a-1 and 240.16a-8
• SEC, Release No. 33-11253, Modernization of Beneficial Ownership Reporting, press release 2023-219 and fact sheet (2023); 17 CFR 240.13d-1; SEC Regulation 13D-G C&DI 101.01
• 17 CFR 240.13f-1; SEC Release No. IA-3220, Family Offices (2011)
• Amazon.com, Inc., Forms 10-K for 2023 and 2025 and Forms 10-Q for Q1 2024 and Q1 2025 (EDGAR)
• NVIDIA Corporation, Forms 10-Q filed May 29, 2024 and May 28, 2025 (EDGAR)
• USA Today, report on completion of Jeff Bezos's 50 million-share Amazon sale (February 22, 2024)
• U.S. Department of Justice, Peizer sentencing release (June 23, 2025) and case page (updated January 2026)
• Reuters, report on the SEC moving to dismiss its civil case against Terren Peizer (August 2026)
• Morgan Lewis, SEC final rules on Section 16(a) reporting by foreign private issuer insiders (2026)
• Bryan Cave Leighton Paisner, SEC 2026 regulatory agenda summary (2026)

Wealthmetrica provides intelligence on investment advisers, family offices and the people who run them. This analysis draws on public regulatory filings, statutes and published research; it is not legal, tax, or investment advice.