Questions / Insider trading
Insider trading: questions answered
Directors, officers and owners of more than 10 percent of a class of a company's registered stock report their holdings and trades to the SEC under Section 16 of the Securities Exchange Act. A Form 3 gives the starting holdings, a Form 4 reports a transaction within two business days, and a Form 5 is a year-end catch-up. All of them are public on SEC EDGAR.
Whether a trade is legal depends on what the trader knew when trading, which no filing shows. The articles below answer the questions people ask most about insider trades, each from the SEC's own rules and forms, with what the filing does not tell you.
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Is it legal for a CEO to sell shares before bad news?
Selling shares before bad news is not illegal in itself. Under SEC Rule 10b5-1, a sale is made on the basis of material nonpublic information if the seller was aware of that information when selling, and a written plan adopted earlier, while unaware, can be a defense. Insider sales are normally reported on a public Form 4.
How can you get free alerts for new SEC filings?
The SEC turns some EDGAR searches into free RSS feeds. Run a Company Search or a Latest Filings search, filter by form type, and use the RSS link above the results in a feed reader. The SEC's separate email update service does not cover company filings. A feed lists filings; it does not explain them.
How do you find a company's insider trades on EDGAR?
Open the SEC's Search Filings page, enter the company's name or ticker in Company Search, and set the Ownership Forms 3, 4 and 5 option to Only. The result lists the company's insider filings, newest first; open any Form 4 to see the trade. It is free, official, and unsummarised.
How do you read an SEC Form 4 in five minutes?
Read a Form 4 in four passes: who is filing and for which company, the code, date, shares and price in Table I, the footnotes, and the Rule 10b5-1 box. The form is due two business days after the trade and shows what was done, not why.
How do you read the tables on a Form 4?
A Form 4 has two tables. Table I lists transactions in the company's shares: date, code, amount, price and the total held afterwards. Table II lists options, warrants and other derivative securities. Each line also says whether the holding is direct or indirect, and indirect ownership names how it is held, such as through a trust.
What are SEC Forms 3, 4 and 5, and when are they due?
Form 3 is the first report an insider files, within 10 days of becoming one, listing what they own. Form 4 reports a transaction and is due within two business days. Form 5 is a year-end report, generally due 45 days after the fiscal year ends, for items not reported earlier. All three are public on SEC EDGAR.
How do you read a Form 144?
A Form 144 is the notice a holder of restricted or control shares files with the SEC when placing an order to sell them under Rule 144, once the sale passes 5,000 shares or $50,000 in three months. It shows how many shares, their market value and an approximate sale date, not a completed trade. OQRO, a tracker of SEC and congressional disclosures, lists these as planned sales and keeps them apart from the trades that a Form 4 reports afterwards.
What does it mean when several insiders buy at once?
Cluster buying is a market term for two or more insiders of the same company buying its stock on the open market within a short period; it is not a term in the SEC's rules. One published study found that clustered insider purchases were followed by abnormal returns above 2% in the next month, while OQRO's own 2026 test found that such stocks still trailed the S&P 500 in the typical case. Neither result predicts any single stock.
Is insider trading legal?
Insider trading is two different things. Officers, directors and large shareholders buying or selling their own company's stock is legal when it is reported, with a Form 4 due within two business days. Trading while aware of material nonpublic information, in breach of a duty, is illegal under SEC Rule 10b-5. A Form 4 shows that a trade happened, not which kind it was, and OQRO, a tracker of SEC and congressional disclosures, describes filings without inferring motive.
Which insider purchases stood out in the week of Sep 28 to Oct 4, 2026?
In the week of Sep 28 to Oct 4, 2026, insiders filed 318 open-market purchases worth about $442M, and ten stood out against their company's own filings since 2006. Three examples: the largest insider purchase at Oracle since 2006, a 10% owner buying Prothena before an executive left, and a large Group 1 Automotive purchase.
What is a Rule 10b5-1 plan?
A Rule 10b5-1 plan is a written plan an insider adopts in advance that fixes how and when shares will be traded. Many sales are made under one, and a Form 4 box and footnote show it. The research does not support saying that most insider sales mean nothing: it supports saying that purchases and sales differ, and that planned sales differ from each other.
What do the transaction codes on a Form 4 mean?
On an SEC Form 4, P means a purchase and S means a sale, and most other letters mark events that are not trades in the market: A is a grant, M an option exercise, F shares withheld for tax, G a gift. In the 90 days to 9 October 2026, OQRO, a tracker of SEC and congressional disclosures, stored 40,124 insider transaction records, and 6.0% of them were open-market purchases.
What is the six-month short-swing profit rule?
Section 16(b) of the Securities Exchange Act says that any profit an officer, director or 10 percent owner makes from a purchase and sale, or sale and purchase, of the company's stock within a period of less than six months belongs to the company. It applies whatever the insider intended. A civil claim, not a criminal charge.
When is a Form 4 late?
A Form 4 is late if it is filed after the end of the second business day following the day of the trade; EDGAR treats a Form 4 submitted by 10 p.m. Eastern as filed that day. In OQRO's records of open-market insider trades dated July to October 2026, 82.3% were disclosed within two weekdays of the trade. A late filing is not flagged on the form, so you find it by comparing two dates.
Who counts as an insider and has to file Form 4?
Under Section 16 of the Securities Exchange Act, the people who must report their company stock are directors, officers, and anyone who owns more than 10 percent of a class of the company's registered equity securities. They file Form 3 when they become insiders and Form 4 after trades. Ordinary employees and small shareholders are not covered.
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All questions · Selling shares before bad news is not illegal in itself.
This explains public filings in plain words. It is not legal or investment advice. Corrections: contact page.