As an executive of a publicly traded company, you must understand the complex rules and regulations that govern your stock holdings. You also need to comply with your company’s insider trading policies that determine when you can trade your company shares. For instance, you may be required to obey blackout periods and defined trading windows.
At the same time, you undoubtedly have personal investing goals that may include portfolio diversification and retirement savings. Morgan Stanley has the experience and knowledge to assist you with navigating your unique situation.
Morgan Stanley Executive Financial Services (EFS) at-a-glance:
- The EFS group is a specialized team of professionals educated in regulatory and U.S. Securities and Exchange Commission (SEC) rules that affect corporate executives and their stock holdings.
- Morgan Stanley has consistently been ranked #1 in 10b5-1 market share, executing over 26,500 plans.
- You benefit from the service of a dedicated team supported by professionals in restricted and control securities, portfolio management, lending, and asset protection.
- Working with you, your company’s corporate counsel, and your Financial Advisor, Morgan Stanley can craft a stock compensation strategy to support your investment objectives, and tie the program into a comprehensive wealth management strategy.
10b5-1 Preset Diversification Program (PDP®)
The SEC adopted Rule 10b5-1 in August 2000, providing an affirmative defense against allegations of insider trading. Morgan Stanley’s dedicated PDP product team will help you implement formal stock selling and/or buying plans that follow the 10b5-1 rule. A PDP trading plan, which must be created at a time when the employee is not in possession of any material nonpublic information, will lay out instructions for future sales or purchases. Once the PDP trading plan is adopted, the PDP product team follows the plan’s instructions.
Key benefits of a 10b5-1 Trading Plan include:
- An affirmative defense against claims of insider trading
- Access to public markets during corporate blackout periods
- Ability to buy or sell stock on a predictable and consistent basis
- Convenience of putting diversification on “auto-pilot”
- Potentially reducing the risks associated with a concentrated stock position
Control and Restricted Securities
The sale of restricted securities and control stock is primarily governed by SEC Rule 144. Morgan Stanley’s EFS team assists our corporate executive clients, as well as non-affiliates of corporations, by helping to ensure that all open market sales fully comply with Rule 144. EFS can also assist with:
- Securities based loans secured by eligible restricted or control stock
- Legend removals to facilitate the transfer of securities for sale, gifting, and other purposes
- Exercise of employee stock options to enable diversification
- Repurchases under Rule 10b-18
For more information about Morgan Stanley’s Executive Financial Services, please contact the EFS team at 732-974-5006
1 Source: The Washington Service tracks insider trade information filed with the Securities & Exchange Commission. The above data is compiled by the Washington Service from Form 144 filings in the period from 2/1/2005 to 12/31/2015. Data from the period 2/1/2005 to 5/31/2009 reflects the formerly separate PDP businesses of the Global Wealth Management Group of Morgan Stanley & Co. LLC and the Smith Barney division of Citigroup Global Markets Inc. that now form Morgan Stanley Smith Barney LLC. The above data also includes transactions from Morgan Stanley & Co. LLC. Information contained herein was obtained from sources believed reliable but the accuracy and completeness thereof cannot be guaranteed. Information contained herein is subject to change.
Preset Diversification Program (PDP® is a registered trademark of Morgan Stanley Smith Barney LLC. Diversification does not assure a profit or protect against loss.
Important Risk Information for Securities Based Lending: You need to understand that: (1) Sufficient collateral must be maintained to support your loan(s) and to take future advances; (2) You may have to deposit additional cash or eligible securities on short notice; (3) Some or all of your securities may be sold without prior notice in order to maintain account equity at required maintenance levels. You will not be entitled to choose the securities that will be sold. These actions may interrupt your long-term investment strategy and may result in adverse tax consequences or in additional fees being assessed; (4) Morgan Stanley Bank, N.A., Morgan Stanley Private Bank, National Association or Morgan Stanley Smith Barney LLC (collectively referred to as “Morgan Stanley”) reserves the right not to fund any advance request due to insufficient collateral or for any other reason except for any portion of a securities based loan that is identified as a committed facility; (5) Morgan Stanley reserves the right to increase your collateral maintenance requirements at any time without notice; and (6) Morgan Stanley reserves the right to call securities based loans at any time and for any reason.
With the exception of a margin loan, the proceeds from securities based loan products may not be used to purchase, trade, or carry margin stock (or securities, with respect to Express CreditLine); repay margin debt that was used to purchase, trade or carry margin stock (or securities, with respect to Express CreditLine); and cannot be deposited into a Morgan Stanley Smith Barney LLC or other brokerage account.
To be eligible for a securities based loan, a client must have a brokerage account at Morgan Stanley Smith Barney LLC that contains eligible securities, which shall serve as collateral for the securities based loan.
Diversification does not assure a profit or protect against a loss in declining financial markets.
Morgan Stanley Smith Barney LLC is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with banks and other third parties to assist in offering certain banking related products and services.
Investment, insurance and annuity products offered through Morgan Stanley Smith Barney LLC are: NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED | NOT A BANK DEPOSIT | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Morgan Stanley Smith Barney LLC and its affiliates and their employees (including Financial Advisors and Private Wealth Advisors) are not in the business of providing tax or legal advice. These materials and any statements contained herein should not be construed as tax or legal advice. Individuals should consult their personal tax advisor or attorney for matters involving taxation and tax planning and their attorney for matters involving personal trusts and estate planning.
CRC 1425320 03/2016