Anthropic, after considering an IPO, required all employees to sell shares according to a fixed schedule, breaking industry convention.

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AI unicorn Anthropic is preparing for an IPO and is considering a rare move—requiring ordinary employees to also follow a preset stock trading plan to sell their shares, to avoid insider trading risks. This approach is almost unprecedented in the tech industry and will directly impact employees’ freedom to monetize their wealth.

According to technology media The Information, sources said on July 27 that Anthropic is discussing this plan with external advisors but has not made a final decision. This issue is expected to be mentioned during meetings with potential public market investors in the IPO roadshow set to begin later this week. The company’s IPO could take place as early as September this year.

The report said that the core background of this consideration is: Anthropic’s valuation has soared from about $4 billion to $965 billion in just three years, and could rise further after the IPO. A large number of early employees will then hold massive wealth, and if they sell in bulk, it could put significant pressure on the company’s stock price. Enforcing preset trading plans helps spread employees’ stock sales over a longer time window, thereby smoothing out market impact.

Industry Practice: 10b5-1 Plans Are Usually Only For Executives

The so-called 10b5-1 plan, under the framework of U.S. securities law, is a compliant trading arrangement requiring participants to sell shares according to a predetermined schedule, quantity, and price, which forms a "firewall" against insider information at the time of execution.

Currently, the scope of this mechanism among public companies is quite limited. According to a report by law firm Gibson Dunn last year, only 13% of S&P 100 companies require or encourage directors and executives to trade primarily through 10b5-1 plans. In other words, making this plan compulsory for all regular employees is virtually unprecedented in large public companies.

Typically, public companies allow most employees to freely trade shares during a few weeks of the “trading window period” after earnings reports are released. If Anthropic enforces a mandatory preset plan, employees can trade outside of those windows, but will lose the flexibility to determine the timing and quantity of their transactions.

Employee share sale arrangements are just one of the issues Anthropic needs to clarify before going public. According to reports, another source revealed the company is also researching what proportion of shares held by existing shareholders can be sold on the IPO day, and how to set the lock-up arrangements usually used to limit insider selling post-IPO.

It is worth noting that even if 10b5-1 plans are enforced, they may not resolve issues such as first-day trading volume or lock-up periods, which must still be negotiated separately.

Lawyers: Promotion of the Plan Among Tech Start-ups is Inevitable

Legal professionals believe Anthropic’s consideration is not unique. Liz Walsh, a capital markets lawyer at Mayer Brown, says a growing number of companies are considering expanding 10b5-1 plans to a broader group of employees, “especially those start-ups engaged in confidential tech R&D.”

Walsh points out, these companies “do not want employees dragged into insider trading allegations, as the costs are high, distracting, and negative for all involved.” However, she admits the plan comes at an employee cost:

Being locked into a fixed trading plan means employees will lose the “flexibility to trade at will.”

Reports also say Anthropic’s consideration of this unconventional plan is closely tied to its internal culture. Sources reveal that the company wants to maintain a culture of free information flow among employees even after going public.

CEO Dario Amodei is known for his high degree of transparency with employees. He gives lengthy “vision speeches” twice a month covering a wide range of topics and is often candid on Slack. However, this open culture will face stricter information disclosure regulations after the company is listed—the more internal information employees possess, the higher the potential insider trading compliance risks.

Amodei said in a 2023 podcast that the company strictly classifies and controls truly sensitive information, while trying to keep everything else open. But as the company goes public, maintaining this balance will become more difficult.

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