SEC Forms 3, 4, and 5
Federal securities laws require certain individuals to report purchases, sales, and holdings of their company’s securities by filing Forms 3, 4, and 5. These individuals or corporate "insiders" – a company's officers and directors, and any beneficial owners of more than ten percent (10%) of a class of the company's equity securities registered under Section 12 of the Securities Exchange Act of 1934 – must file with the SEC a statement of ownership regarding those securities.
The initial filing is on Form 3. When a person becomes an insider (for example, when they are hired as an officer or director), they must file a Form 3 to initially disclose his or her ownership of the company’s securities. An insider of an issuer that is registering equity securities for the first time under Section 12 of the Exchange Act must file this Form no later than the effective date of the registration statement. If the issuer is already registered under Section 12, the insider must file a Form 3 within ten days of becoming an officer, director, or beneficial owner.
In most cases, when an insider executes a transaction, he or she must file a Form 4. With this form filing, the public is made aware of the insider’s various transactions in company securities, including the amount purchased or sold and the price per share. Form 4 must be filed within two business days following the transaction date. Transactions in a company’s common stock as well as derivative securities, such as options, warrants, and convertible securities, are reported on the form. Each transaction is coded to indicate the nature of the transaction.
A Form 5 is generally due to the SEC no later than 45 days after the company’s fiscal year ends and is only required from an insider when at least one transaction, because of an exemption or failure to earlier report, was not reported during the year. For example, some transactions, such as certain purchases by an insider of less than $10,000 in a six-month period, don’t have to be reported on Form 4 when they occur but do have to be reported on Form 5. The Form 5 filing doesn’t have to disclose transactions that have been previously reported. When reporting transactions on Form 5, insiders use the same transaction codes as when reporting on Form 4.