Form 4 Transaction Codes: P, S, A, M, F, G and the Rest

The short version

When a company's directors, officers or holders of more than 10% of a registered class buy or sell its stock, they report it on Form 4 under Section 16 of the Securities Exchange Act. Each line on the form carries a one-letter transaction code that says what kind of transaction it was.

The code matters more than the direction. A Form 4 showing shares "disposed of" might be an open-market sale, a gift to a family trust, or shares the company withheld to cover taxes on vesting stock. Only one of those is an insider choosing to sell into the market. Reading the code first prevents most misreadings of insider activity.

The codes you will see most

Less common codes

• J: other acquisition or disposition, explained in a footnote.
• W: acquired or disposed of by will or the laws of descent.
• I: discretionary transaction under Rule 16b-3(f), such as moves within a company retirement plan.
• K: equity swap or similar instrument.
• L: small acquisition under Rule 16a-6.
• O: exercise of an out-of-the-money derivative.
• E and H: expiration of a short or long derivative position.
• U: disposition from a tender of shares in a change-of-control transaction.
• Z: deposit into or withdrawal from a voting trust.
• V: a transaction voluntarily reported earlier than required.

Why code F is not a sale decision

Code F is the most misread code. When restricted stock units vest or options are exercised, the insider owes income tax. A common arrangement is for the company to keep some of the vesting shares and pay the tax in cash on the insider's behalf. Those withheld shares show up on Form 4 as a disposition with code F.

No shares were sold into the market and no buyer was involved. The officer's holdings rose by 6,300 shares. For exactly this reason, Signal8's insider tables label only codes P and S as purchases and sales, and show other dispositions such as tax withholding separately as non-market transactions.

Exercises: M and X followed by S

An option exercise often produces several lines on one form. The insider exercises options (code M), acquiring shares at the strike price, and may sell some or all of them the same day (code S). Reading only the S line overstates how much stock the insider gave up, because those shares did not exist in the account the day before. Reading only the M line overstates buying, because no cash went into the market at the market price.

The net effect in this hypothetical is unchanged common holdings and 50,000 fewer options, which is very different from "sold 50,000 shares".

Deadlines: two business days and a few exceptions

• Form 3 (initial statement) is due within 10 days of becoming an insider.
• Form 4 is due before the end of the second business day after the transaction date. A trade on Monday is due by Wednesday.
• Form 5 (annual) is due within 45 days after the company's fiscal year end, for certain exempt transactions not already reported.

Since February 2023, gifts (code G) must be reported on Form 4 within two business days, instead of waiting for Form 5. Trades executed under a plan where the insider did not pick the date can use the date the insider learned of the execution, capped at the third business day after the trade.

The 10b5-1 checkbox and footnotes

A Rule 10b5-1 trading plan lets an insider set up trades in advance, while not in possession of material nonpublic information, so that later trades execute on a schedule or formula. Since April 2023, Form 4 has a checkbox indicating that a reported transaction was made under a plan intended to satisfy Rule 10b5-1(c), and insiders typically add a footnote with the plan's adoption date.

Reading the footnotes is part of reading the form. Common footnote content includes:

• the 10b5-1 plan adoption date;
• whether a sale price is a weighted average of several fills, with the price range;
• indirect ownership, such as shares held by a spouse, a trust or a fund the insider controls;
• vesting schedules for derivative securities.

A sale under a 10b5-1 plan adopted months earlier reflects a decision made at adoption, not on the trade date. Amended rules also impose a cooling-off period before trades under a new plan can begin (for directors and officers, the later of 90 days after adoption or two business days after the next periodic report, capped at 120 days).

Indirect holdings and the "D" vs "I" column

Separate from the transaction code, each line shows ownership form: D for direct and I for indirect. Do not confuse this column with transaction code D (disposition to the issuer). An indirect line means the shares sit in an entity or with a relative whose holdings the insider is deemed to beneficially own; the footnote names it.

How to check a company on Signal8

• The insider trades page lists recent Form 4 activity across the market, with open-market purchases and sales distinguished from awards, gifts and withholding.
• Each company page shows insider activity, for example AAPL.
• Insider sales by affiliates often follow a Form 144 notice. The Form 144 guide explains the link to Rule 144.
• For option exercises paid with shares rather than cash, see cashless exercise.

FAQ

What does code S mean on a Form 4?

Code S is an open market or private sale of the company's securities by the reporting insider. It is the code that represents a sale the insider chose to make, although the choice may have been made earlier through a 10b5-1 plan. Check the checkbox and footnotes to see whether a plan was involved and what its adoption date was.

Is a code F transaction an insider selling stock?

No. Code F means shares were delivered to or withheld by the company to pay an option exercise price or the tax due when stock vests. No shares are sold into the market and there is no buyer on the other side. It is a routine consequence of equity compensation, which is why insider activity should be read by code rather than by the direction of the share change.

How soon must insiders file a Form 4?

Before the end of the second business day after the transaction. A Monday trade is due by Wednesday. Gifts have followed the same two-business-day deadline since February 2023. Some plan-driven transactions where the insider does not control the timing can use a deemed execution date, but no later than the third business day after the trade.

What is the difference between code M and code X?

Both are exercises of derivative securities such as options or warrants. Code M covers exercises and conversions exempted under Rule 16b-3, which includes most employee stock options. Code X covers exercises of in-the-money or at-the-money derivatives that fall outside that exemption. In both cases the insider acquires shares, often followed by an S or F line on the same form.