corporate-law finance securities insider-trading
CEOs can&#39;t sell stock without risking imprisonment?
<p>From what I understand if a CEO sells stock in their company and the stock price then goes down significantly within less than a year, they can get indicted for "insider trading" and face 5 to 10 years in jail.</p>

<p>Does this basically mean that a CEO basically has to hold onto stock indefinitely and only sell when they are sure the company is not facing a decline? So, basically sell and pray the company does not tank?</p>

<p>Insiders, such as a CEO, are allowed set up predetermined trading plans to <a href="http://www.investopedia.com/terms/r/rule-10b5-1.asp" rel="nofollow noreferrer">avoid accusations of insider trading</a>:</p>

<blockquote>
  <p>Rule 10b5-1 is established by the Securities Exchange Commission (SEC) to
    allow insiders of publicly traded corporations to set up a trading plan for
    selling stocks they own. Rule 10b5-1 allows major holders to sell a
    predetermined number of shares at a predetermined time. Many corporate
    executives use 10b5-1 plans to avoid accusations of insider trading.</p>
</blockquote>

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<p>See also: </p>

<ul>
<li><a href="https://money.stackexchange.com/q/32244/2155">What constitutes illegal insider
trading</a></li>
<li><a href="https://money.stackexchange.com/q/55405/2155">What is insider trading
exactly?</a></li>
</ul>
