What Is Form 4? SEC Insider Trading Filings Explained
Form 4 reveals when executives buy or sell their own stock. Here's how to read these filings, what the transaction codes mean, and which trades actually matter.
I check Form 4 filings almost every day. It's become a reflex. When a CEO buys $2 million of their own company's stock, I want to know about it within hours, not weeks. When a director quietly dumps shares before bad news drops, that's public too. Form 4 is the SEC filing that tracks every trade made by corporate insiders.
What I like about Form 4 is that it's raw data. Executives can't hide behind press releases and investor presentations here. It's just who traded, how much, at what price, and when. For investors who know how to read it, Form 4 shows what the people closest to a business actually think it's worth.
In this guide:
- What Is Form 4?
- Who Has to File Form 4?
- When Must Form 4 Be Filed?
- Form 4 vs. Forms 3 and 5
- How to Read a Form 4
- Transaction Codes: What Each Letter Means
- The 10b5-1 Plan Checkbox
- Legal vs. Illegal Insider Trading
- What Insider Trades Actually Tell You
- Where to Find Form 4 Filings
- Common Questions About Form 4
- A Simple Insider Research Workflow
What Is Form 4?
Form 4 is the SEC filing that corporate insiders must submit whenever they buy, sell, or otherwise change their ownership of company stock.
The official name is Statement of Changes in Beneficial Ownership. Every trade gets reported: purchases, sales, option exercises, gifts, and more. The SEC publishes it immediately, making insider transactions one of the most transparent data sets in public markets.
Form 4 exists because of Section 16 of the Securities Exchange Act of 1934. Congress decided that if you're an officer, director, or major shareholder of a public company, the public deserves to know what you're doing with the stock. The theory is simple: insiders have information advantages, so their trading activity should be visible.
I think that's fair. If I'm investing alongside a CEO, I want to know whether they're buying more or heading for the exits.
Who Has to File Form 4?
Three categories of people must file.
Officers. This includes the CEO, CFO, COO, and other executive officers as defined by the company. Anyone with policy-making authority typically counts.
Directors. Every member of the board of directors, regardless of whether they're involved in day-to-day operations.
10% Owners. Anyone who beneficially owns more than 10% of any class of the company's equity securities. This catches major shareholders, activist funds, and founders who've retained large stakes.
The SEC calls all of these people "reporting persons" or "insiders." The term doesn't imply wrongdoing. It's just the legal category for people whose trades must be disclosed.
One nuance worth knowing: the filing requirement applies to beneficial ownership, not just direct holdings. If a CEO's spouse owns shares, or if shares are held in a family trust the CEO controls, those count too. Form 4 captures the full picture of what an insider controls.
When Must Form 4 Be Filed?
Within two business days of the transaction.
This is a hard deadline. If a director sells stock on Monday, the Form 4 must be filed by Wednesday's close of business. The SEC doesn't grant extensions for convenience.
The two-day rule was tightened in 2002 as part of the Sarbanes-Oxley reforms. Before that, the deadline was the tenth day of the month following the transaction. A trade on January 5th wouldn't need to be reported until February 10th. That's potentially 36 days later. The faster deadline was designed to give investors real-time visibility.
A few things to note:
- Weekends and federal holidays don't count as business days.
- The clock starts on the transaction date, not the settlement date.
- Late filings happen, but they're flagged and can trigger SEC scrutiny.
- The SEC's EDGAR system won't accept filings on holidays, so insiders need to plan around the calendar.
Form 4 vs. Forms 3 and 5
Form 4 is part of a trio of insider ownership filings.
| Form | Purpose | Deadline |
|---|---|---|
| Form 3 | Initial statement when someone becomes an insider | Within 10 days |
| Form 4 | Report changes in ownership (trades) | Within 2 business days |
| Form 5 | Annual summary of transactions not reported on Form 4 | Within 45 days of fiscal year end |
Form 3 is the starting point. When someone joins a board, gets promoted to an executive role, or crosses the 10% ownership threshold, they file Form 3 to disclose what they already own.
Form 4 tracks changes from that baseline. Every purchase, sale, option exercise, or gift triggers a new filing.
Form 5 is a catch-all for small transactions that were exempt from immediate reporting or any trades that somehow weren't reported during the year. Most active insiders never file Form 5 because everything already hit Form 4.
In practice, I mostly ignore Form 3 and Form 5. Form 4 is where the action is.
How to Read a Form 4
Form 4 is a two-page document split into two tables. Once you understand the structure, you can parse any filing in under a minute. I've read thousands of them at this point, and the format becomes second nature.
The Header: Who and Where
The top of the form tells you:
- Reporting person: The insider's name
- Issuer: The company whose stock was traded
- Relationship: Whether they're an officer, director, 10% owner, or some combination
- Date of earliest transaction: When the trade happened
This header lets you immediately see who traded what company's stock and in what capacity.
Table I: Non-Derivative Securities
Table I covers common shares, preferred stock, and similar securities.
| Column | What It Shows |
|---|---|
| Title of Security | Usually "Common Stock" |
| Transaction Date | When the trade occurred |
| Transaction Code | A letter indicating the type of trade |
| Shares | Number of shares involved |
| Price | Per-share transaction price |
| Shares Owned After | Total holdings following this trade |
| Ownership Form | Direct (D) or Indirect (I) |
The "Shares Owned After" column is the one I look at first. It tells you the insider's total position, not just what changed. If a CEO sells 10,000 shares but still owns 500,000, that context matters a lot.
Table II: Derivative Securities
Table II covers options, warrants, convertible securities, and other derivatives. More complex because these instruments have additional characteristics.
Key columns:
- Title of Derivative: What type of instrument (e.g., "Stock Option")
- Exercise/Conversion Price: The strike price for options
- Transaction Date and Code: Same as Table I
- Number of Derivative Securities: How many options/warrants involved
- Underlying Shares: How many common shares the derivative converts to
- Expiration Date: When the option expires
When an insider exercises options, you'll see entries in both tables: Table II shows the options being exercised (disposed of), and Table I shows the resulting common shares being acquired.
Transaction Codes: What Each Letter Means
Every transaction on Form 4 has a single-letter code explaining what happened. Learning these codes changed how I interpret filings. They're the difference between seeing "50,000 shares sold" and understanding whether that sale actually means anything.
The SEC publishes the complete list of transaction codes on its website.
The Codes That Matter Most
| Code | Meaning | What It Signals |
|---|---|---|
| P | Open-market purchase | Insider bought shares with their own money. Often the most bullish signal. |
| S | Open-market sale | Insider sold shares on the market |
| M | Exercise of derivative | Insider converted options/warrants into shares |
| F | Tax withholding | Shares withheld to cover taxes on vesting equity. Routine, not a real "sale." |
| A | Award/grant | Company granted stock or options as compensation |
Less Common Codes
| Code | Meaning |
|---|---|
| G | Gift. Transfer to charity or family. May be tax-motivated. |
| J | Other. Catch-all category. Check footnotes for details. |
| C | Conversion. Derivative security converted to underlying shares. |
| X | Exercise of in-the-money or at-the-money derivative |
| D | Disposition back to issuer. Returned shares to the company. |
| I | Discretionary transaction. Intra-plan transfer in employee benefit plan. |
Why Codes Matter
The transaction code completely changes how you interpret a filing. This is probably the single most useful thing I've learned about Form 4s.
An insider "selling" 50,000 shares sounds bearish. But then you see the code is F (tax withholding). That's not a decision to sell. It's an automatic mechanism to pay taxes when restricted stock vests. The insider didn't choose to reduce their exposure.
Similarly, code A (award) shows shares flowing to the insider as compensation. That's not them buying because they're bullish. It's just their pay package.
The genuinely discretionary trades are P (purchases) and S (sales). Those are the ones where an insider made a choice to change their exposure with real money on the line. I filter out everything else when I'm looking for signals.
The 10b5-1 Plan Checkbox
Starting in April 2023, Form 4 includes a checkbox indicating whether a trade was made under a Rule 10b5-1 plan. This was part of the SEC's 2022 amendments to modernize insider trading disclosures.
A 10b5-1 plan is a pre-arranged trading program. Insiders set up the plan in advance, specifying how many shares to sell, at what prices, and on what schedule. They do this while they don't possess material non-public information. Then the trades execute automatically, even if the insider later learns something that would otherwise prevent them from trading.
What the checkbox tells you:
If checked, the trade was part of a pre-planned program. The insider didn't wake up that morning and decide to sell. The decision was made weeks or months earlier.
How I think about 10b5-1 sales:
These sales are less informative about current sentiment. An executive might have set up a diversification plan a year ago when the stock was at a different price and the outlook was different. The sale today reflects that old decision, not today's view.
That said, 10b5-1 plans aren't completely meaningless. The existence of a plan tells you the insider wanted a mechanism for regular selling. And insiders can modify or cancel plans. Continued execution means they haven't felt the need to stop.
When the checkbox is empty:
Trades without the 10b5-1 checkbox are discretionary. The insider decided to trade right now, during an open trading window, based on whatever they currently believe about the company. These trades carry more weight in my analysis.
Legal vs. Illegal Insider Trading
A common misconception: Form 4 filings are about illegal insider trading.
They're not. Form 4 is the disclosure mechanism for legal insider trading.
Legal insider trading is when an officer, director, or major shareholder trades their company's stock while following all the rules. They trade during open windows (not blackout periods), they don't have material non-public information at the time, and they file their Form 4 on time. This happens thousands of times every day.
Illegal insider trading is when someone trades based on material non-public information. A CFO who sells stock the day before announcing terrible earnings, knowing those earnings will tank the stock, is committing a crime. The Form 4 would still get filed, but the trade itself was illegal.
Form 4 doesn't distinguish between legal and illegal trades. It's just a disclosure form. The SEC and DOJ use Form 4 data (among other sources) to investigate suspicious patterns, but the filing itself is neutral.
When you see a Form 4, you're seeing evidence that a trade happened. Not evidence of wrongdoing. Most insider trades are perfectly legal. The ones that aren't tend to become news for different reasons.
What Insider Trades Actually Tell You
Here's the practical question: should you care what insiders are doing?
My answer is yes, but with some caveats.
Buying Is Usually More Informative Than Selling
Insiders sell stock for all sorts of reasons that have nothing to do with the business:
- Diversification (they're overexposed to one company)
- Paying for a house, a divorce, or kids' tuition
- Tax planning
- Expiring options that need to be exercised
- Routine 10b5-1 plan execution
Selling doesn't necessarily mean an insider is bearish. It often just means they have a life outside the company.
Buying is different. There's only one reason to buy stock with your own money: you think it's going up. When an insider writes a personal check to acquire shares, especially in size, they're making a directional bet. That's a real signal.
I pay far more attention to buying than selling.
Context Matters
A single Form 4 in isolation rarely tells you much. What matters is the pattern:
- Cluster buying: Multiple insiders buying around the same time is a stronger signal than one person buying once.
- Buying after bad news: Insiders stepping in after an earnings miss or guidance cut suggests they think the reaction is overdone.
- Buying at scale: A $2 million purchase from a CFO who makes $1 million a year is a real commitment. A $20,000 buy from a billionaire CEO is a rounding error.
- First-time buyers: An insider who has never bought on the open market suddenly doing so is worth watching.
- Selling acceleration: Routine 10b5-1 sales are noise. An insider abandoning their plan or suddenly selling outside of it is worth noticing.
For more on patterns, see Form 4 Patterns That Predict Stock Moves and Insider Buying Trends by Sector.
Where to Find Form 4 Filings
Form 4 filings are public the moment they hit the SEC's system.
SEC EDGAR: The official source is sec.gov/cgi-bin/browse-edgar. You can search by company or insider name. The interface is dated but authoritative.
Earnings Feed: Our insider filings hub shows Form 4s in real time as they're filed, organized by company. You can add companies to a watchlist and see insider activity alongside other SEC filings. Create a free account to track the names you care about.
Third-party trackers: Sites like OpenInsider, WhaleWisdom, and others aggregate Form 4 data with additional filtering and screening tools.
Common Questions About Form 4
How quickly are Form 4s filed after a trade?
The legal deadline is two business days. Most filings come in on time, but late filings do occur. The SEC tracks timeliness, and persistent lateness can invite regulatory attention.
Do Form 4 filings include the insider's total holdings?
Yes. Both Table I and Table II show the insider's position after the transaction. You can see not just what changed, but what they still own.
What if an insider trades in a family member's account?
That's still reportable. Beneficial ownership includes shares held by spouses, children, or trusts the insider controls. These show up as "indirect" ownership on the form.
Can I trade based on Form 4 information?
Yes. Once a Form 4 is filed, the information is public. There's nothing illegal about following insider activity. Whether it's a good strategy is a separate question. The data is informative but not magic.
Why do some insiders never seem to buy?
In many industries, especially tech, executives receive so much stock-based compensation that their exposure is already enormous. They're more focused on diversifying than adding. Open-market purchases are more common in sectors like financials and energy, where ownership culture is different. See Insider Buying Trends by Sector for more on these patterns.
A Simple Insider Research Workflow
You don't need a complicated system to get value from Form 4s. Here's what I do.
Weekly Scan
- Look for cluster buys across the market. Multiple insiders buying at the same company.
- Note any large open-market purchases by CEOs or CFOs at companies on my watchlist.
- Flag names where insider buying lines up with a recent big move in the stock price.
Pre-Investment Check
Before buying a stock:
- Look back across the last 6-12 months of Form 4s.
- Ask whether insiders have been net buyers, net sellers, or roughly neutral.
- Note if any insiders bought at or above the current price.
- Separate routine 10b5-1 selling from discretionary trades.
I'm not looking for perfection. I'm looking for patterns that either support my thesis or give me pause.
Ongoing Monitoring
For positions I already own:
- Add the company to my Earnings Feed watchlist so I see Form 4s as they hit EDGAR.
- When a big trade appears (especially a CEO/CFO buy), stop and read the filing.
- If something feels off, like heavy insider selling combined with other red flags, I revisit my thesis.
Start Tracking Insider Activity
Form 4 is the SEC's mechanism for tracking what corporate insiders do with their own stock. Every purchase, sale, option exercise, and gift gets reported within two business days. It's one of the most timely data sources available to investors.
The key to using Form 4 effectively:
- Focus on open-market purchases (code P). That's where insiders are putting real money on the line.
- Discount routine activity. Tax withholding (F), automatic 10b5-1 sales, and compensation awards (A) are noise.
- Look for clusters and context. Multiple insiders buying after a selloff matters more than one random purchase.
- Check the insider's total position. A small sale from a huge stake is different from a complete exit.
If you want to track insider activity without digging through EDGAR:
- Browse recent Form 4 filings to see what's happening across the market
- Create a watchlist to follow insider trades at companies you own
- Read our guides on Form 4 patterns and sector-level insider trends for deeper analysis
The filings are public. The edge comes from knowing which ones matter.