Your obligations as a public company insider
When you became an officer or director of a public company, a set of legal obligations attached to you personally. Your company's compliance team will carry most of the operational weight, but the filings are made in your name, a missed one is your liability, and the ban on trading while you hold inside information reaches your own account. This guide sets out what you are now responsible for, written from your side rather than the company's.
Most of the mechanics are handled for you. Understanding them still matters, because the two situations that create real personal exposure, a missed deadline and a trade you should not have made, are both ones where a few minutes of your own attention changes the outcome.
What you became
Under the Securities Exchange Act of 1934, you are now a Section 16 reporting person, a regime covering directors, designated officers and anyone owning more than 10% of a registered class of the company's equity. Officer status turns on your actual policy-making role, not your title, and the company records that decision with an effective date. From that date, your trades in company stock are publicly reported on a fast clock, certain matched trades can cost you money regardless of intent, and trading on information the public lacks becomes a personal liability.
Timing of Forms
Your company will usually prepare and file these for you, but the deadlines are short enough that you should know them by heart.
- Form 3 reports what you hold on day one and is due within 10 days of becoming a reporting person. Every later filing measures change against it, so the opening position needs to be right.
- Form 4 reports a change in your holdings and is due before the end of the second business day after the transaction. The clock runs from the trade, vest or exercise, not from when anyone notices it.
- Form 5 is an annual catch-up for certain transactions not reported earlier, due within 45 days of the company's fiscal year end. Clean Form 4s all year leave it with little to do.
Form 4 is the clock that governs your life as an insider, and the company can only meet it if it knows the transaction happened.
Powers of attorney
To make two-business-day filing workable when you are traveling or unreachable, you will typically sign a limited power of attorney letting named people file on your behalf. Sign it, and understand its limit: you delegate the mechanics, not the accountability. The obligation to report accurately and on time stays with you, so the company still needs to hear from you promptly whenever you transact outside the arrangements it already knows about.
The line you cannot cross
You may not trade the company's securities while in possession of material non-public information (MNPI), or pass it to someone who does. This is not a company policy you can be excused from. It is anti-fraud law under Section 10(b) and Rule 10b-5, with civil and criminal exposure behind it. MNPI is information a reasonable investor would consider important that the market does not yet have: unreleased results, a pending deal, a major contract, a leadership change. When you hold it, you sit out, however good your reasons to trade. Pre-clearance helps keep you on the right side of the line, but a cleared trade made while you held MNPI is still a violation.
One edge of this law is still moving. In SEC v. Panuwat, the SEC won a jury verdict in April 2024 on a "shadow trading" theory: that an executive who used his employer's confidential information to trade the stock of a different, economically linked company committed insider trading. The Ninth Circuit heard the appeal on June 11, 2026, and at the time of writing no decision has been issued. It is not settled law, but it is a good reason to treat information from your role as reaching beyond your own company's stock, and to ask before assuming a trade is unconnected.
Short-swing profits: the trap without intent
Section 16(b) catches honest people. If you buy and sell, or sell and buy, company equity within any six-month period, the company (or a shareholder suing on its behalf) can recover the profit, whether or not you held inside information. Intent is irrelevant, so the only defense is not to create the matched pair in the first place, which means watching the six-month window around every transaction.
Windows and pre-clearance
Your company's insider trading policy adds its own controls, deliberately stricter than the law: trade only in open windows, and clear trades in advance where required. When a window is closed, you do not trade. When clearance is required, you request it and wait. Clearances also expire, so last week's approval does not cover a trade today.
How a 10b5-1 plan protects you
If you want to sell on a predictable schedule, to diversify or fund a purchase, a Rule 10b5-1 plan lets you do it without timing each sale around what you know. A plan adopted in good faith while you hold no MNPI, fixing amounts, prices and dates in advance (or by formula), gives you an affirmative defense for the trades it executes.
Those conditions are strict. For directors and officers, the first trade cannot happen until the later of 90 days after adoption or two business days after the company files the 10-Q or 10-K covering the quarter of adoption, capped at 120 days. You must certify in the plan that you hold no MNPI and are acting in good faith, and that good faith has to last for the life of the plan, not just the day you sign it. Overlapping plans are generally barred, single-trade plans are limited to one in any 12 months, and changing a plan's amount, price or timing counts as terminating it and adopting a new one, which restarts the cooling-off period. Our guides "10b5-1 plan administration for legal teams" and "Adopting a 10b5-1 plan, an executive's guide" cover the detail.
Household members
Trades by people and entities whose holdings are attributed to you, such as a spouse, minor children or a family trust you control, can be your reporting obligations and can create your short-swing matches. Treat them as your own transactions and make sure the company hears about them. The reconstruction that most often goes wrong is the one where a family account traded and nobody told the person whose filing it was.
What happens when you leave
Your obligations do not end with your last day. A transaction after you step down still has to be reported on Form 4 if it falls within six months of an opposite-way transaction you made while still an insider, and that pair can be matched under Section 16(b). Before you go, confirm with the company what stays open.
None of this should make an ordinary transaction feel dangerous. Tell the company when you trade, sit out when you hold MNPI, watch the six-month window, and use a plan when you want to sell on a schedule. Real exposure comes from the gaps: the trade nobody was told about, and the deadline nobody could meet because the transaction was invisible.
Your company may run InsiderList to close those gaps. It keeps an effective-dated record of your reporting-person status, runs a pre-clearance portal where you request and receive clearance with its validity window, shows live trading-window status, and prepares reviewed, filing-ready Section 16 data under your power of attorney for the company's filing provider, which files while counsel reviews. It is the company's system. The obligations it supports are yours.
See the insider workflow your company runs on your behalf. [Book a demo with our team.]
InsiderList is insider trading compliance software used by companies in the UK, Europe, the USA and the UAE. This article is for general information and does not constitute legal advice. For advice on your situation, consult qualified US securities counsel.
