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Use of Blind Trusts to Protect Against Claims of Insider TradingUse of Blind Trusts to Protect Against Claims of Insider Trading

They may be a more flexible alternative to 10b5-1 plans.

12 Min Read
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If your client is an insider of a company and wants to sell company stock while protecting against claims of insider trading, a traditional approach has been to create a Rule 10b5-1 plan (10b5-1 plan). If properly structured and executed, a 10b5-1 plan affords an insider exposed to material non-public information (MNPI) with an affirmative defense against claims of insider trading.

Yet 10b5-1 plans have a downside. They’re rigid. The idea behind the 10b5-1 plan is that, if your client instructs a broker on the sale of their company stock when they’re not in possession of MNPI, and the broker follows their instructions, the sale couldn’t have been influenced by MNPI your client later received. While simple in concept, the idea is premised ...

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About the Authors

Darlene M. Marchesani

Director of Delaware Trust Administration, Trust Counsel, Fiduciary Trust International

Darlene leads of Fiduciary Trust’s Delaware office. Darlene has over 25 years of trusts and estates experience in practice and administration and is a member of Fiduciary Trust’s Management and Operating Committees. Prior to joining Fiduciary Trust, she served as the managing director of Delaware Trust Services and Trust Counsel for Evercore Trust Company. Prior to that, she was a senior trust advisor at Wilmington Trust Company and Wells Fargo. She practiced law at Richards, Layton & Finger, Mesirov Gelman and Reed Smith, where she specialized in trusts and estates law. She is a founding member of the Delaware Community Foundation Fund for Women. Darlene is currently a member of the Delaware State Bar Association, Trusts & Estates Section, and she has served as a panelist at the Delaware Trust Conference. She received her J.D. and LL.M. (Taxation) from the Widener University School of Law. She is admitted to the Pennsylvania, New Jersey, and Delaware Bars.

Bryan D. Kirk

Managing Director and Trust Counsel, Fiduciary Trust Company International

Bryan D. Kirk, Managing Director and Trust Counsel, is a senior trusts and estates advisor for Fiduciary Trust Company International, where he provides guidance on all aspects of estate planning and trust and estate administration. Mr. Kirk has broad experience in multi-generational asset management and transfer planning, including estate, gift, generation-skipping transfer and income tax planning, charitable giving, philanthropy, real property matters and complex assets, such as private equity and debt. He also serves as Chief Fiduciary Officer of Fiduciary Trust Company International of California. Before joining Fiduciary Trust Company International, he was a partner with Botto Law Group LLP in San Francisco. Mr. Kirk earned his law degree from University of California, Berkeley, and graduated cum laude from Claremont McKenna College with a Bachelor of Arts degree in literature and government.