Form 4 explained: how to read insider trading filings
Form 4 is the SEC filing that discloses when officers, directors and 10% owners buy or sell company stock, due within 2 business days. Learn every key field and code.
Key takeaways
- Form 4 is the SEC filing that a company's officers, directors and owners of more than 10% of a class of its stock must submit within 2 business days of a change in their holdings.
- The single-letter transaction code tells you what happened; code P is an open-market purchase and code S is an open-market sale, while codes A, M, F and G usually reflect compensation, option exercises, tax withholding and gifts.
- Since April 2023, Form 4 includes a checkbox showing whether a trade was made under a Rule 10b5-1 trading plan, which helps separate pre-scheduled sales from discretionary ones.
- Most insider selling is routine compensation and tax activity, so the open-market purchase (code P) is the transaction investors watch most closely.
A Form 4 is the SEC filing that a company insider (an officer, a director, or a beneficial owner of more than 10% of a registered class of equity) must file within 2 business days after buying, selling or otherwise changing their ownership of the company's securities. It is the main public record of insider trading in US-listed stocks. Reading one well comes down to three things: who filed it, which transaction code they used, and whether the trade was discretionary or pre-planned.
What is a Form 4?
Form 4, officially the "Statement of Changes in Beneficial Ownership," is required by Section 16(a) of the Securities Exchange Act of 1934. Section 16 covers three groups, usually called "Section 16 insiders":
- Directors of the company.
- Officers, meaning the executives defined in SEC Rule 16a-1(f): the CEO, CFO, principal accounting officer, and any vice president in charge of a major business unit or function, plus anyone performing a policy-making role.
- Beneficial owners of more than 10% of a registered class of equity securities.
Form 4 is one of three related forms. Together they create a continuous record of what insiders own.
| Form | When it is filed | Deadline | What it shows |
|---|---|---|---|
| Form 3 | Person first becomes an insider | Within 10 days | Initial holdings |
| Form 4 | Any change in holdings, with narrow exceptions | Within 2 business days | Each transaction |
| Form 5 | Annual catch-up for exempt or deferred items | Within 45 days after fiscal year end | Transactions not previously reported |
All three are filed electronically on EDGAR and become public almost immediately. You can find them on the SEC's full-text and company search at https://www.sec.gov/edgar/search/.
When is a Form 4 due?
A Form 4 is due before the end of the second business day after the transaction date. A sale executed on a Monday must be reported by Wednesday night. The 2-business-day deadline dates from the Sarbanes-Oxley Act of 2002; before that, insiders could wait until the 10th day of the following month.
There is one notable exception. For trades under a Rule 10b5-1 plan or certain employee benefit plans where the insider does not choose the execution date, the deadline runs from the date the insider is notified of the trade, as long as that is no later than the third business day after the trade.
Late filings happen. Companies must disclose delinquent Section 16 filers in their annual proxy statement under the heading "Delinquent Section 16(a) Reports."
How to read a Form 4, section by section
A Form 4 has a header and two tables.
Header (boxes 1 to 7). Box 1 is the reporting person's name and address. Box 2 is the issuer name and ticker. Box 3 is the date of the earliest transaction. Box 5 shows the relationship to the issuer: Director, Officer (with title), 10% Owner, or Other. Box 6 indicates individual or joint filing.
Table I: Non-Derivative Securities. This covers common stock. Each row shows the title of the security, transaction date, transaction code, amount, whether shares were acquired (A) or disposed of (D), the price, the amount owned after the transaction, and whether ownership is direct (D) or indirect (I), such as through a trust or family member.
Table II: Derivative Securities. This covers options, restricted stock units, warrants and convertible securities. It adds the exercise price, exercisable and expiration dates, and the underlying shares.
Footnotes. Footnotes often hold the most useful context: weighted average prices for trades filled at multiple prices, the date a 10b5-1 plan was adopted, or an explanation that shares were sold to cover taxes.
Form 4 transaction codes
The transaction code in Table I, column 3 is the fastest way to understand what happened. These are the codes you will see most often:
| Code | Meaning | Typical signal value |
|---|---|---|
| P | Open-market or private purchase | Highest. Insider spent their own cash. |
| S | Open-market or private sale | Moderate. Often diversification or taxes. |
| A | Grant or award from the company | Low. Compensation, not a market decision. |
| M | Exercise or conversion of a derivative exempt under Rule 16b-3 | Low on its own. Look at what happens to the shares next. |
| F | Shares withheld to pay exercise price or tax | Very low. Automatic tax withholding. |
| G | Bona fide gift | Very low. Estate planning or charity. |
| D | Disposition back to the issuer | Low. Often buybacks of unvested shares. |
| X | Exercise of an in-the-money or at-the-money derivative | Low to moderate. |
| C | Conversion of a derivative security | Low. |
| J | Other acquisition or disposition (explained in footnotes) | Read the footnote. |
Other codes exist (for example W for transfers by will, I for discretionary transactions under employee benefit plans, and V for voluntary early reports), but they appear less often. The full list is in the SEC's General Instructions for Form 4.
A common pattern is an M row followed by S rows on the same day: an executive exercised options and immediately sold the resulting shares. That is usually a compensation event rather than a view on the stock.
What changed with Rule 10b5-1 in 2023
Rule 10b5-1 lets insiders set up a written trading plan while they do not have material nonpublic information, then let trades execute automatically later. The SEC amended the rule in December 2022, with Form 4 changes effective April 1, 2023. The main changes:
- Cooling-off periods. Directors and officers must wait the later of 90 days after adopting or modifying a plan, or 2 business days after the company files its 10-Q or 10-K for the quarter in which the plan was adopted (capped at 120 days), before the first trade. Other insiders wait 30 days.
- Form 4 checkbox. Form 4 now has a checkbox indicating whether the reported transaction was made under a plan intended to satisfy Rule 10b5-1(c), and the filer must give the plan's adoption date.
- Gifts. Bona fide gifts of securities must now be reported on Form 4 within 2 business days, instead of later on Form 5.
- Company disclosure. Companies must disclose in their 10-Q and 10-K (Item 408 of Regulation S-K) when directors and officers adopt or terminate 10b5-1 plans.
The practical effect: you can now see at a glance whether a sale was pre-scheduled months ago or decided recently. The SEC's summary of the amendments is at https://www.sec.gov/rules-regulations/2022/12/insider-trading-arrangements-related-disclosures.
Worked example: reading a hypothetical Form 4
Suppose Acme Corp (ticker ACME) files a Form 4 for its CFO with these Table I rows:
| Date | Code | Shares | A/D | Price | Owned after |
|---|---|---|---|---|---|
| 2026-03-02 | M | 20,000 | A | $12.00 | 95,000 |
| 2026-03-02 | S | 20,000 | D | $41.15 (weighted avg) | 75,000 |
| 2026-03-02 | F | 3,100 | D | $41.20 | 71,900 |
The 10b5-1 checkbox is ticked, and a footnote says the plan was adopted on 2025-11-14.
How to read it:
- M row. The CFO exercised 20,000 options with a $12.00 strike. Table II will show the matching reduction in options.
- S row. The same 20,000 shares were sold at a weighted average of $41.15. The footnote will typically offer to provide the full price breakdown on request.
- F row. 3,100 shares were withheld to cover taxes on a separate vesting event.
- Context. The checkbox and the adoption date show the sale was scheduled about 3.5 months earlier under a 10b5-1 plan. The CFO still holds 71,900 shares directly.
Taken together, this is a routine exercise-and-sell. Compare that with a different filing where a director reports a single code P row buying 50,000 shares at $40.10 for about $2 million, with no 10b5-1 checkbox. That purchase was a discretionary decision to put personal money into the stock, which is why investors weigh it differently. The guide on how to track insider buying covers how to judge that kind of signal.
Why insider buying and selling are not symmetric
Insiders sell for many reasons that have nothing to do with the outlook for the company: paying taxes on vested equity, buying a house, diversifying a concentrated position, or estate planning. Insiders typically buy on the open market for one main reason: they expect the shares to be worth more. This asymmetry is why many investors filter Form 4 data down to code P purchases and treat code S sales with more caution.
A few other details matter:
- Indirect ownership. Shares held by a spouse, a trust or a fund the insider controls are reported with "I" and a footnote. A 10% owner that is a venture fund may report trades by multiple affiliated entities on one form.
- Short-swing profits. Under Section 16(b), insiders must give back to the company any profit from a purchase and sale (or sale and purchase) within less than 6 months. This discourages frequent trading and is one reason open-market purchases tend to be held.
- Blackout windows. Most companies prohibit insiders from trading in the weeks before earnings. Discretionary trades therefore cluster in the open window after an earnings release.
How to track Form 4 filings on Quantisnow
Quantisnow streams Form 4 filings as they hit EDGAR and tags each one by ticker and transaction type:
- The insider trading feed shows every new Form 4 in real time, and the insider purchases feed filters to open-market buys.
- The Form 4 category page collects recent filings, and top insider purchases ranks the largest recent buys.
- For a single company, the insiders page follows the pattern /insiders/ACME, and the insiders overview shows activity across the market.
- To get notified, see alerts and following tickers.
For the bigger picture of how Form 4 fits with other filings, see how to read SEC filings and Form 144 explained, which covers the notice insiders file before selling restricted or control stock.
FAQ
Who has to file a Form 4?
Directors, officers (as defined in SEC Rule 16a-1(f)), and beneficial owners of more than 10% of a registered class of a company's equity securities must file Form 4. Ordinary employees who are not officers do not file.
How long do insiders have to file a Form 4?
A Form 4 is due by the end of the second business day after the transaction. For certain 10b5-1 plan and benefit plan trades where the insider does not pick the date, the clock can start when the insider is notified, up to 3 business days after the trade.
What does code P mean on a Form 4?
Code P means an open-market or private purchase of the company's securities. It is the code most associated with an insider using personal money to increase their stake.
What does code F mean on a Form 4?
Code F means the insider paid an option exercise price or a tax liability by delivering or having the company withhold shares. It is usually automatic tax withholding when restricted stock vests and carries little information about the insider's view.
Does a 10b5-1 sale mean the insider is bearish?
Not necessarily. A 10b5-1 sale was scheduled under a plan adopted at least 30 to 120 days earlier, depending on the insider's role, so it reflects a past decision rather than a reaction to current information.
Where can I find Form 4 filings?
Form 4 filings are public on the SEC's EDGAR system at https://www.sec.gov/edgar/search/. Quantisnow also streams them in real time on its insider trading feed, tagged by ticker and transaction code.