Assuming this is not a new IPO, and no lock-ups, how far in advance do insiders have to declare selling their stock?

From what I read online, they certainly can not immediately sell their stock the day or 2 before they report earnings, but how far in advance do they have? A month? 2 months?

  • 1
    Corporate insiders (as defined by the law) can set up plans where they sell stock on a specific schedule that they have no ability to change. This lets them sell some stock to fund expenses without the insider trading restrictions since the sales were set up well in advance. – zeta-band Oct 2 '18 at 23:47

To my knowledge, there are no laws in the US that specify any specific time frame during which insiders cannot sell company stock. Insider trading laws instead are based on the access to material, non-public information, regardless of timeframe.

Many companies have policies that prevent employees from trading within certain timeframes of press releases or earnings reports without prior approval, but those are company-specific policies, not legal requirements.

The bottom line is if someone trades (or "tips" someone else who trades) on the basis of material, non-public information, then that person may be guilty of insider trading.

  • What if you don't trade on the basis of material non-public information? (e.g. supposing you habitually sell your stock or short-stock in a failing company every quarter before reports because you expect it to go down anyway, but one time you get insider news that the next quarterly-report shows huge successes: you then decide to not sell the stock or short it, can you get in trouble? – Dai Oct 3 '18 at 4:38
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    @Dai IANAL, but I expect that any investment decision based on insider information is a violation. However, it's probably hard to catch someone not acting. But if they have something set up to perform a transaction automatically, and they turn it off, that could conceivably be noticed. – Barmar Oct 3 '18 at 5:01
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    @Barmer. I believe that deviating from an announced sale because you know the stock will go up would be a violation as well, but I am not a lawyer. – D Stanley Oct 3 '18 at 13:15

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