We study the real effects of the SEC’s 2022 amendments to Rule 10b5-1, implemented in 2023Q1, on corporate innovation investment. Using a firm-quarter panel from 2021Q1 to 2025Q3, we implement a continuous difference-in-differences and event-study design that exploits cross-sectional variation in firms’ pre-reform exposure to profitable Rule 10b5-1 insider selling, measured from post-trade cumulative abnormal returns following plan-based sales and aggregated to the firm–quarter level. We find that R&D investment increases after implementation among more-exposed firms. Mechanism evidence shows sharp post-reform declines in insiders’ sell-side profitability, consistent with the reform reducing private trading benefits, and the R&D response is amplified when CEOs’ compensation is more equity-based. At the same time, trading frictions increase and turnover declines for more-exposed firms, indicating a countervailing market-frictions force; these frictions are significantly attenuated when institutional ownership is higher, and correspondingly the R&D responseis stronger in high-institutional-ownership firms. Overall, the evidence is consistent with a trade-off in which the reform curtails private trading benefits while increasing market frictions, with the private-benefit channel dominating on net and institutional ownership mitigating the frictions headwind.