Tag Archives: SEC compliance

Which Forms Do Corporate Insiders File with the SEC?

Insiders of Reporting Companies File SEC Forms 3, 4, 5

Since June 30, 2003, the SEC has required insiders to submit forms electronically through the SEC’s EDGAR system.  The SEC now also requires reporting companies with websites to post Forms 3, 4 and 5 by the end of the next business day after the forms are filed with the SEC.

Who Is a Corporate Insider?

Affiliates are also termed “corporate insiders.”  For the purposes of SEC Forms 3, 4 and 5, a corporate insider includes any officer or director, and any shareholder who beneficially owns greater than 9.99% percent of any class of the Company’s equity securities which are registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”).

(Affiliates or insiders of Pink Sheets or non-reporting companies are not required to file SEC Forms 3, 4 and 5.  The requirements only extend to the insiders of  “mandatory SEC filers” which are subject to the reporting requirements of Section 12 of the Exchange Act.)

SEC Form 3 Reports Initial Beneficial Ownership by Insiders

An insider of an SEC reporting company that is registering equity securities for the first time under Section 12 of the Exchange Act must file this Form on or before the effective date of the registration statement.

If the public company is already registered under Section 12, Form 3 must be filed within Ten (10) days of becoming an officer, director, or beneficial owner of Ten (10%) Percent.

SEC Form 4 Reports Changes in Beneficial Ownership by Insiders

SEC Form 4 is used by insiders to report changes in ownership.  Form 4 must be reported to the SEC within Two (2) business days. Some limited categories of transactions not subject to the Two (2) business day reporting requirement.

SEC Form 5 Reports Changes Not Timely Filed on Form 4

SEC Form 5 is used by insiders to report any transactions that either a) should have been reported earlier on a Form 4 or b) were eligible for deferred reporting.  When Form 5 must be filed, an insider has Forty-Five (45) days after the end of the company’s fiscal year to file.

What is Fair Disclosure under Regulation FD?

Regulation FD is a public company disclosure rule designed to address selective disclosure.  The theory behind Regulation FD is to prevent insider trading by promoting the full and fair disclosure of material non public information.

When a public company discloses material nonpublic information to shareholders or market professionals, (who may trade on that information) that the company must also make public disclosure of the same material information.

How is Public Disclosure Made Under Regulation FD?

Under Regulation FD, the required public disclosure is generally made by filing an 8-K, but it is possible for an Issuer to follow the spirit of the regulation through a combination of other methods if the same information is disseminated.

When Must Disclosure Be Made Under Regulation FD?

Under Regulation FD, the timing of the required public disclosure depends on whether the selective disclosure was intentional.  If the selective disclosure is intentional, the public company must make public disclosure at the same time.   In the case of a non-intentional disclosure, the Issuer must promptly make disclosure to the public.