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Investor Peter Thiel Sells Facebook Shares

The first SEC documents about insider sales of Facebookstock has been filed.

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Nicholas Kamm | AFP | Getty Images
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Early investor Peter Thiel has sold nearly all of his shares, as part of a selling plan he adopted before Facebook's IPO on May 18. (Related: Accel Unloads Facebook on Its Own Investors: Sources.)

Thiel sold some 22 million shares on Thursday (the forms were due by end of day Monday), and about 2 million shares were part of a distribution to his limited partners. Thiel will retain more than 5 million shares and will remain on Facebook's board.

This sale is not a huge surprise, considering that just last week Thiel converted some nine million Class B shares to Class A shares, giving him the flexibility to sell his shares. He also sold 16.8 million shares in the Facebook IPO.

Thiel adopted the plan to sell these shares as part of a 10b5-1 trading plan on May 18, right before Facebook's IPO. So Thiel's sale is not in response to what's happening at the company or the stock's drop. (Related: Facebook Now the Worst Performing Stock in Past 3 Months.)

Could he have cancelled the plan to sell? It's possible — but unlikely.

An attorney said the change to the plan would have to happen in an open trading window and Thiel would have to confirm he didn't have any material, non-public information. Thiel's on the board, so he's an insider.

Thiel's plan to sell was in motion before the IPO and it's common for an angel investor to exit soon after a company goes public but InsiderScore.com's Director of Research Ben Silverman said his interpretation of Rule 10b5-1 plans is that Thiel could have cancelled the sale if he wanted to.

"The purpose of Rule 10b5-1 plans is to provide an affirmative defense, but not safe harbor, against insider trading allegations," Silverman said. "For someone to be guilty of insider trading, an actual trade has to be transacted. As such, the cancellation of a plan would not be an insider trading offense because the action would result in no trade, thus no punishable offense, occurring."

—By CNBC's Julia Boorstin
@JBoorstin

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.