During the 1990s, the use of stock-based compensation by U.S. companies skyrocketed. Many companies bound their officers and employees to insider trading compliance policies, requiring personnel to pre-clear proposed transactions in company securities with a compliance officer. These policies, however, frequently fail to stipulate the precise level of discretion afforded the compliance officer. Accordingly, if a compliance officer's decision to withhold pre-clearance results in losses in the insider's stock or stock-option portfolio, the insider can sue the issuer for breach of the covenant of good faith. In this Comment, Steven Chasin proposes a standard-analogous to the business judgment rule-to adjudicate such lawsuits: The insider must prove an improper clearance process, manifested by the compliance officer's failure to make an informed decision in good faith. The author explains that this standard is appropriate because the distinction between legal and illegal insider trading is often unclear. He shows that issuers need wide discretion to minimize their exposure to an array of potential liabilities that arise both directly and indirectly from insider trading. Finally, the author proposes several recommendations to issuers to prevent such insider lawsuits.