SEC Form 4, explained

The 30-second version

Anyone who is an officer, director, or 10%+ shareholder of a U.S. public company has to tell the SEC, on the public record, every time they buy or sell shares in that company. The form they file is called Form 4, and it has to land within two business days of the trade.

Section 16(a) of the Securities Exchange Act of 1934 is what mandates this. The intent is to make sure ordinary investors can see what insiders are doing — quickly, in machine-readable form, and without intermediaries.

What a Form 4 actually contains

Every filing reports at least one transaction in a structured XML block. The fields you should care about as a reader:

• Insider name and title — "CFO," "Director," "10% owner." A CFO buying is a different signal from a director buying.
• Transaction code — a single letter that tells you what kind of trade it was. P = open-market purchase. S = open-market sale. A = stock grant or award. M = exercise of a derivative.
• Shares and price-per-share — multiply for total dollar value.
• Shares owned after transaction — lets you compute the change as a percentage of the insider's total stake. A 40% increase in personal holdings is more meaningful than the dollar value alone.
• Transaction date vs filed date — most Form 4s land within a day, but some come in right at the 2-business-day deadline. A wide gap is worth noting.

Why Code P matters more than Code A

The most common Form 4 transaction is not a buy or sell — it's a stock award (Code A). Executives receive grants as part of standard compensation, on a vesting schedule, and these don't reflect any opinion on the stock.

Code P, on the other hand, is voluntary. The insider chose to spend personal cash to buy shares on the open market. That's the strongest possible signal of confidence — they could have done anything else with the money, and instead they bought their own company.

What makes a signal stand out

• The role. A CFO buying is the gold standard. CFOs sit on the financial plumbing; if anyone has an informational edge, it's them.
• The size, relative to compensation. A $250K Code-P buy from someone with a $20M total comp package is signal. A $250K buy from someone making $400K is conviction.
• The cluster. One insider buying could be opportunism. Three or more insiders buying within 60 days is a coordinated signal — see our piece on cluster insider buying.
• The timing. A buy at the 90-day low is different from a buy at the 90-day high.

What to ignore

• 10b5-1 plan sales. Look for a footnote that says the trade was made under a pre-arranged plan. The insider scheduled the sale months in advance and didn't choose the timing.
• Tax-related sales alongside option exercises. Often a "sell to cover" for the tax bill, not a directional bet.
• Tiny buys. Sub-$10K trades by directors are usually qualifying purchases for board-membership requirements, not conviction.

Catalyst classifies all of this automatically. Browse the live insider feed to see Form 4 filings as they land, or read our methodology for how the tiers and conviction scores are assigned.