Form 4
An SEC Form 4 is a mandatory filing that reports changes in ownership of company stock by "insiders"—officers, directors, and any shareholder owning more than 10% of the company. It must be filed within two business days of the transaction.
The Trader's Take
The Signal
Open-market purchases (buy signals) are historically strong indicators of executive confidence, as insiders only buy for one reason: they believe the price will rise.
The Noise
Automatic sales via 10b5-1 plans are often "noise" for tax or liquidity needs and shouldn't necessarily be viewed as bearish.
Actionable Insights
- 1Look for cluster buys: when multiple executives buy in the same month.
- 2Ignore small sales that occur at the same time every year.
- 3Identify "informative" buys where the executive increases their holding by >10%.
Regulatory Context & Context
| Timing / Deadline | Reporting Requirement |
|---|---|
| 2 Business Days | After the execution of the transaction. |
| Ongoing | Any change in beneficial ownership must be reported. |
Form 4 vs Form 5
Form 4
An SEC Form 4 is a mandatory filing that reports changes in ownership of company stock by "insiders"—officers, directors, and any shareholder owning more than 10% of the company. It must be filed within two business days of the transaction.
Form 5
SEC Form 5 is an "Annual Statement of Changes in Beneficial Ownership." It is used to report any transactions that were exempt from Form 4 reporting or should have been reported on Form 4 but weren't.
Common Misconceptions
Selling doesn't always mean a crash. Insiders sell for tuition, houses, or diversification.
A Form 4 doesn't mean the executive just bought; it can also report option exercises or grants.
Frequently Asked Questions
Is Form 4 mandatory?
Yes, for all Section 16 insiders of publicly traded companies in the US.
Can a Form 4 be filed late?
Technically yes, but late filings must be disclosed in the company's annual proxy statement (Form Def 14A).