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Form 4
Also called: Form 3, Form 5, Section 16, insider filing, insider transaction
The filing in which a company’s officers, directors and 10%-plus shareholders report their trades in its stock, due within two business days.
Explanation
Section 16 of the Exchange Act makes officers, directors and beneficial owners of more than 10% of a registered class report their holdings: Form 3 on becoming an insider, Form 4 within two business days of most transactions, and Form 5 within 45 days after the fiscal year-end for anything deferred.
Each line carries a transaction code. The most telling are P (open-market purchase) and S (open-market sale). Many others are routine: A (grant or award), M (option exercise), F (shares withheld to pay tax on vesting), G (gift). A checkbox shows whether a trade was made under a Rule 10b5-1 plan.
Insiders sell for many reasons (taxes, diversification, a house) but buy for one. Open-market purchases by several insiders, especially at a beaten-down small cap, are among the more informative signals in public filings.
Why it matters
Insider buying after a selloff can signal confidence; heavy discretionary selling ahead of an offering or bad news is a warning. Foreign private issuers are exempt, so their insiders file no Form 4s.
How Equity Dictionary measures it
The Insiders tab parses Form 4 filings into a transaction table with decoded codes, summaries for the last 90 days and 12 months, an open-market-only switch and a 10b5-1 marker on planned trades.
Related terms
- Rule 10b5-1 plan: A written plan, set up in advance, that schedules an insider’s trades in company stock and shields trades made under it from insider-trading claims.
- Schedule 13D and 13G: The reports anyone who acquires more than 5% of a company’s voting stock must file: 13D for activists and would-be controllers, the shorter 13G for passive investors.
- Form 8-K: The current report a company must file within four business days of a major event, organized into numbered items.
- Form 20-F and 6-K: The annual report (20-F) and current reports (6-K) that foreign private issuers listed in the US file in place of the 10-K, 10-Q and 8-K.
Plain-English summary for research; not legal or investment advice.