The increased focus of regulators, media and private litigants on insider trading has recently expanded to a new target: Rule 10b5-1 trading plans (10b5-1 plans), which are intended to invoke the affirmative defense against insider trading claims provided by Exchange Act Rule 10b5-1 for trades executed pursuant to a written plan that meets specific requirements. 10b5-1 plans are best known as devices to allow company insiders to buy or sell securities pursuant to a pre-arranged instruction without facing automatic liability for insider trading. When properly implemented, the rule enables both investors and issuers to execute trades, even when they know material nonpublic information, so long as the trades are made pursuant to a plan established when the investor or issuer did not have inside information. These protections can extend beyond the diversification needs of individual company executives. For example, trades made by hedge funds pursuant to stop-loss and trailing-stop orders may be protected from insider trading liability if the orders are designed and implemented in accordance with Rule 10b5-1’s parameters. And the protections of Rule 10b5-1 are not limited to publicly-traded stocks. Private equity funds and other distressed debt investors and investment managers can also benefit from Rule 10b5-1, such as by using a 10b5-1 plan to make future acquisitions of company debt without running afoul of insider trading restrictions. The protection of the affirmative defense is not absolute, however, and those trading under the auspices of even a properly adopted 10b5-1 plan have to be careful not to undermine their protection. In a two-part series of guest articles, Daniel Laguardia, K. Mallory Brennan and Ross Kamhi explain the mechanics of 10b5-1 plans and their application to the private funds industry; examine the lessons that can be learned from an inquiry into possible insider trading by a major private equity fund manager that purchased debt of a portfolio company pursuant to a 10b5-1 plan (the inquiry ultimately determined that the trading had not violated insider trading restrictions); and recommend practices that may enhance the defensibility of a 10b5-1 plan. Laguardia is a partner in Shearman & Sterling’s Litigation Group, and Brennan and Kamhi are associates in that group. This is the first article in the two-part series.