What are SEC Forms 3, 4 and 5, and when are they due?

What does each form report?

All three forms come from the same rule, Section 16 of the Securities Exchange Act, which applies to directors, officers and owners of more than 10 percent of a company's registered stock (see who has to file). The SEC's investor bulletin describes them this way.

The statute is consistent with the first row: Section 16(a) requires the initial statement within ten days after a person becomes a beneficial owner, director or officer. The forms themselves, with their instructions, are on sec.gov: Form 3, Form 4 and Form 5.

What is a Form 3 for?

When a person is hired as an officer or elected a director, a Form 3 sets the baseline: how many shares, options or other securities the person holds on the day the status begins. It is the starting balance against which later Forms 4 are read. A Form 3 is not a trade. It tells you what someone owned when they became an insider.

What is a Form 4 for?

In most cases, when an insider executes a transaction, a Form 4 follows. The bulletin says the form makes the public aware of the transaction, including the amount purchased or sold and the price per share, and that both common stock and derivative securities such as options, warrants and convertible securities are reported. Each transaction is coded to show its nature: P for a purchase on an exchange or from another person, S for a sale, A for a grant or award from the company, M for the exercise or conversion of a derivative security, F for payment of an exercise price or tax using securities received from the company, and G for a gift, among others. The full list of codes, with examples, is in what the Form 4 transaction codes mean.

Since reports filed on or after 1 April 2023, a Form 4 also carries a checkbox showing that a transaction was intended to satisfy the Rule 10b5-1 defense, as the SEC's fact sheet states.

What is a Form 5 for?

A Form 5 is required only when at least one transaction was not reported during the year, because an exemption applied or because it was not reported earlier. The bulletin gives an example: certain purchases by an insider of less than $10,000 in a six-month period do not have to be reported on a Form 4 when they happen but do have to be reported on a Form 5. A Form 5 does not repeat what was already reported, and it uses the same codes as a Form 4.

A worked sequence

As an illustration of how the forms fit together, take a person who is hired as a company's chief financial officer. A Form 3 is filed within 10 days of the start date. When the officer later buys shares in the open market, a Form 4 with code P is due within two business days. If the officer is granted stock by the company, that is also reported on a Form 4 with code A, and so on. Reading the sequence of forms for one person, oldest first, gives the full ownership history that the public record contains.

Where to find them

All three are public on SEC EDGAR, and the bulletin points to the EDGAR database for them. The article on finding a company's insider trades on EDGAR walks through the search. OQRO's Form 4 guide shows a real filing line by line.

Which form answers which question?

A quick reference. What did this person own when they became an insider? Form 3. What did they do recently? Form 4. Was anything missed or exempt during the year? Form 5. Was a sale planned in advance? The Rule 10b5-1 box on a Form 4 says the insider marked it so, and a separate Form 144 announces a proposed sale under Rule 144 (see the article on Form 144 listed under related guides). Where is the full list of transaction codes? In the general instructions to Form 4, which the SEC bulletin points to.

Reading the forms in date order for one person gives a ledger: a Form 3 for the opening balance, a Form 4 for each change and, if needed, a Form 5 for items outside the Form 4 rules.

What this does not tell you

The forms record holdings and transactions, not reasons. The bulletin says that many investors believe insider purchases and sales can provide useful information about the views of insiders, and also that insiders may sell for any number of reasons, including liquidity and diversification. A Form 3 does not show the value of the holdings, only the amounts. A Form 4 filed on time is still filed after the trade, so it is a record of the past two business days at the latest, not a live feed.