Let us start with the SEC rule in question,
10b5-1
10b5-1(b) states that Subject to the affirmative defenses in paragraph (c) of this section, a purchase or sale of a security of an issuer is "on the basis of" material nonpublic information about that security or issuer if the person making the purchase or sale was aware of the material nonpublic information when the person made the purchase or sale.
10b5-1(c) provides that:
1.
i. Subject to paragraph (c)(1)(ii) of this section, a person's purchase or sale is not "on the basis of" material nonpublic information if the person making the purchase or sale demonstrates that:
A. Before becoming aware of the information, the person had:
- Entered into a binding contract to purchase or sell the security,
- Instructed another person to purchase or sell the security for the instructing person's account, or
- Adopted a written plan for trading securities;
B. The contract, instruction, or plan described in paragraph (c)(1)(i)(A) of this Section:
- Specified the amount of securities to be purchased or sold and the price at which and the date on which the securities were to be purchased or sold;
- Included a written formula or algorithm, or computer program, for determining the amount of securities to be purchased or sold and the price at which and the date on which the securities were to be purchased or sold; or
- Did not permit the person to exercise any subsequent influence over how, when, or whether to effect purchases or sales; provided, in addition, that any other person who, pursuant to the contract, instruction, or plan, did exercise such influence must not have been aware of the material nonpublic information when doing so; and
C. The purchase or sale that occurred was pursuant to the contract, instruction, or plan. A purchase or sale is not "pursuant to a contract, instruction, or plan" if, among other things, the person who entered into the contract, instruction, or plan altered or deviated from the contract, instruction, or plan to purchase or sell securities (whether by changing the amount, price, or timing of the purchase or sale), or entered into or altered a corresponding or hedging transaction or position with respect to those securities.
Stating that he decided to sell the stock for political reasons and had explored the possibility of doing so with legal and ethics counsel does NOT qualify.
Of course, if he didn't have such nonpublic material information, he's committed no legal wrong. However, if he was in possession of nonpublic material information when making the sale, he's dead meat.
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