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The Securities and Exchange Commission requires corporate insiders to disclose their stock transactions through a series of forms. Understanding the differences between Form 3, Form 4, and Form 5 is essential for any investor who wants to leverage insider trading data in their research process.
This guide breaks down each form, explains when they're filed, and shows you how to use each type effectively for investment analysis.
| Aspect | Form 3 | Form 4 | Form 5 |
|---|---|---|---|
| Purpose | Initial ownership | Transaction reporting | Annual cleanup |
| When Filed | Within 10 days of becoming insider | Within 2 business days of trade | Within 45 days of fiscal year-end |
| Frequency | Once (per company) | After every transaction | Annually (if needed) |
| Investor Value | Low-Medium | High | Low |
| Signal Type | Baseline context | Real-time trading signals | Catch-up information |
Form 3 is the "birth certificate" of insider status. It establishes the baseline ownership for anyone who becomes a corporate insider - whether through promotion, appointment to the board, or acquiring more than 10% of a company's shares.
Form 3 must be filed within 10 days of:
Form 3 discloses:
Reporting Person Information
Securities Owned
Derivative Securities
New Executive Analysis: When a new CEO or CFO joins, their Form 3 reveals how much stock they're bringing or receiving. Large initial stakes suggest confidence and alignment with shareholders.
10% Owner Identification: Form 3 filings can alert you to activist investors or major shareholders building positions before they file Schedule 13D.
Context Building: Form 3 establishes the baseline for tracking future Form 4 activity.
A technology company appoints a new CEO. Within 10 days, she files Form 3 showing:
- 500,000 shares granted as part of her employment agreement
- 200,000 options exercisable at $45/share
- Zero indirect holdings
This tells you she's starting with significant "skin in the game" through her grant, and you can now track her Form 4 filings to see if she adds to this position with personal purchases.
Form 4 is the most important insider filing for investors. It reports every change in an insider's beneficial ownership, providing near-real-time visibility into when executives buy or sell company stock.
Form 4 must be filed within 2 business days of any transaction that changes an insider's beneficial ownership. This includes:
Form 4 provides detailed transaction information:
Table I: Non-Derivative Securities
Table II: Derivative Securities
Footnotes
| Code | Meaning | Investor Relevance |
|---|---|---|
| P | Open market purchase | Most bullish - voluntary buying with personal funds |
| S | Open market sale | Context-dependent - could be routine or concerning |
| A | Award/grant | Neutral - compensation, not a buy decision |
| M | Exercise of derivative | Neutral - often followed by sale |
| G | Gift | Neutral - estate/charitable planning |
| F | Tax withholding | Neutral - automatic, not a sell decision |
| C | Conversion | Depends on context |
| D | Disposition to company | Company buyback programs |
1. Focus on "P" Transactions Open market purchases are the clearest bullish signal. When a CEO uses personal funds to buy stock, they're expressing conviction.
2. Look for Clusters Multiple insiders filing Form 4s with purchases within a short period is statistically the most predictive pattern.
3. Analyze Size Compare transaction value to the insider's total holdings. A purchase that increases position by 25%+ is more meaningful than a token buy.
4. Check Footnotes Always read footnotes for context about 10b5-1 plans, derivative details, and ownership structures.
5. Track Timing Purchases immediately after earnings (when blackout periods end) can be especially meaningful.
Filing Details:
- Insider: John Smith, CEO
- Transaction: P (Purchase)
- Date: January 15, 2026
- Shares: 50,000
- Price: $42.15
- Value: $2,107,500
- Shares After: 350,000
Analysis:
- Open market purchase (P code) = bullish
- Significant size ($2.1M)
- Increases holdings by 16.7%
- No 10b5-1 plan mentioned = discretionary
- Signal: Strong bullish indicator
Form 5 is the "catch-up" form. It reports any transactions that either:
Form 5 must be filed within 45 days after the end of the company's fiscal year - but only if there are transactions to report that weren't covered by Form 4.
Many insiders never file Form 5 because all their transactions are already reported on Form 4.
Form 5 uses the same format as Form 4 with two tables:
Each transaction is marked with a code indicating why it wasn't reported on Form 4:
Some transactions don't require Form 4 reporting but must be disclosed on Form 5:
Limited Real-Time Value: Because Form 5 is filed annually, the information is stale for trading decisions.
Compliance Check: Frequent late filings or "L" codes may indicate sloppy compliance culture.
Complete Picture: Form 5 helps ensure your total ownership calculations are accurate.
Gift Tracking: Large gifts reported on Form 5 can indicate estate planning activities.
At fiscal year-end, a CFO files Form 5 showing:
- Three small purchases (under $10,000 each) marked exempt
- One late-filed purchase from 6 months ago (marked "L")
The late filing is a yellow flag for compliance, but the small exempt purchases are routine.
Let's follow a fictional insider through all three forms:
Maria Johnson joins XYZ Corp as CEO
- Form 3 Filed: January 8
- Initial Holdings: 0 shares direct, 100,000 options
Maria receives her signing bonus
- Form 4 Filed: March 17
- Transaction: A (Award)
- Shares: 200,000
- Value: $0 (grant)
Maria buys stock with personal funds
- Form 4 Filed: June 22
- Transaction: P (Purchase)
- Shares: 50,000 at $52
- Value: $2,600,000
- Signal: Strong bullish - CEO voluntarily buying
Maria exercises options and sells some shares
- Form 4 Filed: September 12
- Transaction 1: M (Exercise) - 25,000 shares
- Transaction 2: S (Sale) - 15,000 shares at $68
- Signal: Neutral - exercise + partial sale for diversification
Any unreported transactions from the year
- Maria's Form 5: Not required (all transactions reported on Form 4)
Form 4 is far and away the most important for investment decisions:
Form 3 helps you understand:
Form 5 is useful for:
TIMELINE: Insider Filing Requirements Day 0: Person becomes insider └── Form 3 due within 10 days Day 15: Insider buys 10,000 shares └── Form 4 due within 2 business days Day 45: Insider exercises options └── Form 4 due within 2 business days Day 180: Small exempt transaction (<$10K) └── No Form 4 required; report on Form 5 Day 365: Fiscal year ends └── Form 5 due within 45 days (if needed)
Form 5 is only used for exempt transactions or late filings. Most insiders file Form 4 for all transactions. If you see many Form 5 filings, it may indicate:
No. Each transaction should appear on exactly one form. Form 4 is the standard; Form 5 catches anything that didn't make it to Form 4.
Failure to file can result in:
Late filers are flagged in company proxy statements, which can be a red flag for governance quality.
Not directly, but large Form 3 filings from new executives can indicate:
All forms are available on SEC EDGAR:
Form 4 is most important. It provides real-time transaction data with 2-day filing requirements. Open market purchases (code "P") are the strongest buy signals. Forms 3 and 5 provide useful context but less actionable trading intelligence.
Look for these indicators: Transaction code "P" (purchase), significant dollar amount ($100K+), multiple insiders buying within 30-90 days, purchases increasing position by 10%+, and absence of 10b5-1 plan mention in footnotes.
Direct ownership means shares held in the insider's own name. Indirect ownership includes shares held through trusts, family members, partnerships, or other entities where the insider has voting or investment control.
Yes, all SEC filings are free and public. Access them through SEC EDGAR at sec.gov. Many financial websites and insider trading platforms also aggregate this data with enhanced filtering and alerts.
Activity varies by role and compensation structure. Executives with large option grants may file frequently as grants vest. Some directors hold minimal stock. Frequent Form 4 filings with purchases signal engaged, invested management.
Requirements vary by jurisdiction. The EU has Market Abuse Regulation (MAR), the UK has FCA rules, and Asian markets have varying requirements. US-listed foreign companies (ADRs) may have different obligations depending on their SEC registration.
InsiderTradeFlow automatically tracks Form 4 filings across 10,000+ companies, filtering out noise from grants and tax withholdings to surface the purchases that matter. Start your free trial to see insider conviction scores for any stock.