Nvidia CEO Jensen Huang sells 202,797 company shares under a pre-arranged ...

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Nvidia CEO Jensen Huang sells 202,797 company shares under a pre-arranged ...

Nvidia CEO Jensen Huang has recently sold 202,797 shares of the company's stock worth approximately $39 million. According to the filings with the US Securities and Exchange Commission (SEC) the transactions were executed between July 24 to July 28. The shares were sold at prices ranging from $172.07 to $176.37, near Nvidia’s 52-week high of $177. Despite this sale of stock, Huang still owns more than 73.8 million shares of the company. This recent sale of stock by Huang is part of a prearranged

10b5-1 trading plan

which was adopted by the Nvidia CEO in March this year. The trading plan is created to allow company insiders to sell shares without facing any accusations of insider trading. The sale is said to be a part of a planned disinvestment strategy by Huang. However, the key to understanding these sales lies in the nature of a Rule 10b5-1 plan.

Explained: What is is a rule 10b5-1 trading plan

The rule 10b5-1 is a regulation created by the U.S. Securities and Exchange Commission (SEC). The rule enables the corporate insiders to sell company shares via a predefined trading plan. It also acts as an affirmative defense against the charges of insider trading.

How the plan works

- Pre-planned transitions: The plan enable the insiders to establish a written trading plan at a time when they are not in possession of material non-public information (MNPI) about their company.- Specific parameters: The plan must also reveal the amount, price and date of trades or include a formula for determining them.

- No discretion: Once the plan is established, after the insider cannot exercise any influence over the trades. The transactions are they automatically executed as per the pre-set schedule.- Transparency: These trading plans are disclosed publicly via the SEC filings in order to provide transparency to the market. The main objective of the rule 10b5-1 trading plan is to enable insiders to diversify their portfolios, manage liquidity and meet personal financial obligations. So, in case of Nvidia CEO selling stocks under a Rule 10b5-1 plan suggest that these transactions were scheduled well in advance before the recent market developments or company-specific news.

Nvidia CEO Jensen Huang sells $36.4 million in stock

This is the second time in July that Nvidia CEO Jensen Huang sold the company stocks. Earlier in July, Huang sold 225,000 shares of company stock worth around $36.4 million. According to the recent filings with the US Securities and Exchange Commission (SEC), the transactions were executed between July 8 and July 10. This transaction made by Huang follows the previous batch of stock which he sold in June this year. Last month Huang offloaded 1,00,000 shares in the span of two days.

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