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1) What is a Form 4?

A Form 4 is a document that discloses insider trades that result in a change in ownership, and any associated transaction information.  These forms must be filed with the Securities and Exchange Commission (SEC) within two business days of the transaction.

A full list of transaction types and descriptions can be found in our FAQ.

 

2) Who has to file Form 4s?  How do you define an “insider”?

'Insiders' are required to file Form 4s in a timely manner following transactions in their company's stock.  An insider is defined by the SEC as a reporting companies’ directors, officers, and > 10% shareholders by Section 16 of the Exchange Act. 

 

3) What are the differences between a Form 3, 4, and 5?

A Form 3 is the initial report of beneficial ownership of securities.  This is the form an insider will file when they join a public company or the company they work for goes public.  These forms report the insider’s initial holdings – including common stock directly and indirectly held, restricted stock units, stock options, and other derivative securities.

Form 5s are the annual report of beneficial ownership.  If an insider’s transactions throughout the prior year do not meet the threshold for a Form 4 filing, they must file a Form 5 with their current holdings and other transactions that have occurred in the prior year.  The deadline for Form 5s is February 15.

 

4) How do you read a Form 4?

5) Are insiders required to file derivatives securities holdings and transactions?

Yes, Forms 3, 4, and 5s all have a “Table II” in which insiders are supposed to list “derivative securities acquired, disposed of, or beneficially owned.”  However, the Washington Service has discovered that the reporting of derivate securities is inconsistent.  As a result, we’ve created a proprietary process to extract Table II trades and tracking derivative security holdings over time.  If you’re interested in this data, contact us here.

 

6) How does The Washington Service’s capture data from insider filings?

WS’s proprietary form reading process combines human and computer intelligence.  Our automated software allows us to quickly and accurately identify standardized fields.  To assist the software, at least two different data integrity specialists key and review every form to ensure the cleanest, highest-quality data.   The data integrity specialists are able to extract trade information from the free text footnotes and correct a range of filing errors, providing information that other automated services are unable to.  WS also runs a variety of daily quality assurance and database maintenance checks.

For more information about our data quality, click here.

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