Who files a Form 4, and when
Section 16(a) of the Securities Exchange Act of 1934 requires three groups to report their transactions in their own company’s equity: officers, directors and beneficial owners of more than 10% of any class of the company’s registered equity securities. Together they are called Section 16 insiders. Each of them files a Form 3 within ten days of becoming an insider, a Form 4 for each change in holdings, and a Form 5 within 45 days of the fiscal year end for anything exempt from Form 4 or left unreported.
The deadline has been two business days since the Sarbanes-Oxley Act of 2002. Before that, insiders had until the tenth day of the following month, so a trade could stay private for six weeks. Today the filing reaches EDGAR, the SEC’s electronic filing system, the moment the SEC accepts it, and it is public at once. A few transactions, such as gifts and certain plan transactions, may be deferred to the Form 5.
What a Form 4 contains
The form has two tables. Table I lists non-derivative securities, usually common stock: the transaction date, a transaction code, the number of shares acquired or disposed of, the price, the holdings after the transaction and whether the shares are held directly or indirectly, for example through a trust. Table II lists derivative securities such as options, restricted stock units and warrants, with their exercise price, exercise and expiration dates and the underlying shares.
The transaction code is the key to reading it. Code P is an open-market or private purchase and code S an open-market or private sale. Code A is a grant or award, M an exercise or conversion of a derivative, F shares withheld to pay tax or an exercise price, G a gift, D a disposition to the issuer, C a conversion and J anything else, explained in a footnote. Since April 2023 the form also has a checkbox for transactions made under a Rule 10b5-1 trading plan, with the plan’s adoption date.
How InsiderTell reads it
InsiderTell polls EDGAR’s filing feed every two minutes, fetches each Form 4 and 4/A, parses the XML inside it and stores every row. Only codes P and S become scored signals, because only a purchase or sale on the open market says something about what the insider thinks the stock is worth. Grants, exercises, tax withholding and gifts are stored and shown on the filing pages but never scored. One insider’s P rows in one filing are summed into one buy signal; S rows into one sell signal.
Questions
How quickly must a Form 4 be filed?
Before the end of the second business day after the transaction. A trade on a Monday must be reported by the close of Wednesday. The filing is public on EDGAR as soon as the SEC accepts it.
What is the difference between Form 3, Form 4 and Form 5?
Form 3 is the initial statement of holdings, due within ten days of becoming an officer, director or 10% owner. Form 4 reports each change in those holdings within two business days. Form 5 is the annual catch-up, due within 45 days after the fiscal year end, for transactions that were exempt from Form 4 or that should have been reported and were not.
Does a Form 4 purchase mean the insider expects the stock to rise?
Not necessarily. An open-market purchase is the insider’s own money at risk, which is why it is studied, but insiders buy for many reasons, including ownership guidelines and signalling. A Form 4 is a record of what happened, not a forecast. InsiderTell shows what followed past purchases, always with the sample size.
Where can I read a Form 4 for free?
On EDGAR at sec.gov, under the company’s or the insider’s filings. Every transaction on InsiderTell links to its filing on EDGAR.