In 2006, David Zucker, CEO of Midway Games, came under fire for selling a significant number of shares in Midway, just weeks before the sharp fall in the stock. A year later, Angelo Mozilo, chairman and chief executive officer of Countrywide Financial, has also increased the pace of its sale of shares in months to problems in financing the U.S. mortgage market led to the same thing of the share price in Countrywide. Both leaders have placed their trades through pre-programs known as 10b5-1 plans. 10b5-1 plans, named after the rule with the Securities and Exchange Commission, which led to their creation, provided a systematic method for corporate executives, who were usually in possession of confidential information in order to engage in the sale of the company. When implemented accordingly, 10b5-1 plans provided shelter escaped that such persons from liability under the law of insider trading, showing that certain conditions guarantees were in place during executed. However, the circumstances in which, as leaders hold their program has led to protests from shareholders that the programs have been abused. Regulators and shareholders were left to decide whether the two men were executed their 10b5-1 plans in good faith in accordance with the requirements, or their action was complex forms of illegal insider trading. "Hide
by David F. Larcker, Brian Tayan Source: Stanford Graduate School of Business 27 pages. Publication Date: November 9, 2007. Prod. #: CG10-PDF-ENG
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