Trading Restrictions on Company Stock

[RCK]

I work for a plan sponsor with several large 401(k) plans that hold publicly traded company stock.

We have a 25% cap on the portion of any contribution that can go into company stock, and prohibit any transfer that would result in a company stock holding in excess of 25% of their account. Since this seems explicitly allowed under PPA and Notice 2006-107, we intend to keep the limit.

But we also restrict a participant's company stock buy back rights after they have sold any company stock, and this is clearly not allowed under 2006-107. Since we are worried about the period around earnings release dates, we are considering suspending trading in ALL funds for a period preceeding and following all release dates. In this context, trading includes just balance transfers and reallocations--it would not include contributions, withdrawals, loans, loan repayments.

I'm looking for thoughts, reactions, better ideas, etc.

[JanetM]

RCK how actively is the stock traded? I agree with not allowing company stock transactions for period around earnings announcements for those who have insider knowledge but that doesn't apply to every person in the company.

I can only see the limits on buy back after selling if the stock is thinly traded, these churnings could bid up the price. For thinly traded stock I would envision minimum 14 day - maybe even a 30 day window after sale if person wants to buy back.

[RCK]

Average daily trading in excess of 1 million shares. Real 16(b) insiders are automatically limited, but our concern is those people who can watch the insiders coming out of meetings, to see if there's a smile on their face, a spring in their step.

[JanetM]

We extended the insider definition to anyone working at HQ or at HQ of any operating companies in the control group.

2006-107 says that you can't restrict the co stock trades more then the fund trades. Look at it like this, some mutual funds now impose charge if you sell less than 30 days after you buy. Look at how your funds are restricted and do the same with the stock. If you don't have any funds that prohibit excess trades (doubtful in my mind) then add that rule to the plan - after giving proper notice.