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Form 144

What is a Form 144?

A Form 144 is a document filed with the SEC by any holder of restricted stock who intends to sell those shares. The filer is then permitted, but not required, to sell the restricted shares at any time within 90 days after the Form 144 is filed.

For the purposes of analyzing insider trading, we consider Form 144s as an "intent to sell," indicating that an insider wants to have the opportunity to sell shares over the next three months. While less of a definitive signal than a completed sale, Form 144 filings can shed light on how insiders value their companies. Tables I and II (formerly the second page of these filings) also includes information on how the shares were acquired and shares sold by the insider in the past three months.

Historically, the vast majority of Form 144s were not available on EDGAR as they were filed on paper and mailed (or emailed) to the SEC. From April 2020 to June 2022, the SEC Reference Room (which processed these paper filings) was closed, due to the COVID-19 Pandemic; consequently, no mailed-in filings were disseminated by the SEC during that period. However, approximately 70% of forms filed were submitted via email, and those Forms were processed and disseminated in real-time. After the Reference Room’s limited opening in early June 2022, paper filings gradually became available. In October 2022, the SEC published an amendment requiring the electronic filing of Form 144s; since April 13, 2023, Form 144s have predominantly been filed electronically via EDGAR, with limited exceptions for certain filers. 

Why do Insiders Hold Restricted Stock?

People can hold restricted stock for a variety of reasons that differ from company to company. Following are two of the more common reasons:

(1) options granted to insiders become restricted stock when exercised;

(2) original investors and founders are often holders of restricted stock.

Who Files Form 144s?

Trusts and related entities that plan to sell restricted stock are also required to file Form 144s. However, if the filer is an insider (or related to an insider), they will have to file a Form 4 if and when they actually sell the restricted stock. The Washington Service has created a proprietary system that connects insiders with their trusts and other entities. As a result, EZ-Insider users can see all related filings in a single table.

Do Foreign Issuers File Form 144s?

Officers and directors of foreign issuers traded on US stock exchanges are still required to register proposed sales of restricted stock on Form 144s; however, they are not required to submit Form 4 filings to the SEC. Although there are often no Form 4s to confirm the completion of Form 144s, Table II on the Form 144 lists any sales completed during the prior 90 days and can be used to confirm the completion of previously-disclosed sales, with some limitation. Thus, Form 144s are an important source of information on insider stock sales at foreign companies.

Why Include Form 144s into Your Work Flow?

(1) Form 144s are valid for 90 days and as a result can foretell possible future sales; but even if left unfulfilled, the filings provide a better understanding of insider sentiment at a company. These forms can provide an informational advantage as, although publicly available, historical Form 144 data was difficult to source and is not widely available.

(2) Form 144s provide a rare source for insider trading information at foreign issuers, who are not bound by the same SEC disclosure rules as domestic companies. Table II of the filing provides details about recent sales of restricted stock made by an insider in the prior three months, which may confirm the fulfillment of previously filed Form 144s.

(3) Form 144s provide more complete Rule 10b5-1 plan information, as they are an excellent source for plan adoption dates.

(4) Form 144s contain broker information unavailable on Form 4s, allowing deeper insight into who handles an insider's transactions. Using this broker information on Form 144, WS compiles rankings of the broker market based on metrics including value, number of shares, and number of filings brokered during a given month.

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