A review by White & Case of 50 insider trading policies publicly filed by 25 Fortune 100 companies and 25 mid-cap companies pursuant to the new SEC rule on insider trading arrangements revealed the following practice trends, among others:
Material Non-Public Information (MNPI)
- Most companies deem MNPI to be “public” one or two trading days after release (44% and 42% of companies, respectively).
- 52% of quarterly blackout periods start approximately two weeks prior to quarter-end and 22% start three to four weeks prior to quarter-end.
- 54% of companies end their quarterly blackout periods one full trading day after the release of earnings, while 40% end their periods after two full trading days.
- 86% of companies subject directors, Section 16 officers/executive officers, and other designated employees who have access to quarterly financial information to regular quarterly blackout periods.
Preclearance requirements
- Nearly all policies have preclearance requirements.
- The vast majority of preclearance requirements cover directors, Section 16 officers / executive officers, and other designated employees who have access to quarterly financial information (86%).
Covered transactions
Company securities
- ~70% of policies include restrictions on gifts.
- 56% of policies exempt exercises of options when there is no associated sale on the market.
- 56% of policies exempt ESPP purchases made with regular payroll deductions (applies only to companies with ESPPs).
- 36% of policies exempt 401(k) plan purchases in company stock made via regular payroll deductions (applies only to companies with this benefit).
Other companies’ securities
- 18% of policies specifically prohibit "shadow trading" by insiders.
The General Counsel/CLO is the most common administrator of companies’ insider trading policies by a wide margin.