The Essential Guide to SEC Form 4: Statement of Changes in Beneficial Ownership
SEC Form 4: Statement of Changes in Beneficial Ownership is a document required to be filed with the Securities and Exchange Commission (SEC) whenever there is a significant change in the holdings of company insiders—comprising directors, officers, or any shareholders owning 10% or more of the company’s outstanding stock. The form demands details about the reporting person’s relationship to the organization and transactions involving equity shares.
Complying with Sections 16(a) and 23(a) of the Securities Exchange Act of 1934 and Sections 30(h) and 38 of the Investment Company Act of 1940, filing Form 4 is mandatory and its details become part of the public record upon submission.
Key Takeaways
- Form 4 must be filed with the SEC whenever there is a material change in company insiders’ holdings.
- Failure to disclose required information on a Form 4 can lead to civil or criminal actions.
- This form must be filed within two business days from the end of the day the material transaction occurred.
Understanding SEC Form 4: Changes in Beneficial Ownership Simplified
SEC Form 4 is one of the key documents required by the SEC to maintain transparency in the ownership of publicly-traded stocks or securities. It complements other critical forms, each having its specific criteria and timeline.
Form 3: Initial Reporting
Individuals must file Form 3 when they become officers, directors, or beneficial owners of a company’s stock. They need to file this form within 10 days of attaining said position.
Form 4: Tracking Changes
Form 4 is submitted when insiders witness changes in their holding status. This form must be filed within two days of any related transaction. It covers buy-and-sell orders and the execution of stock options, detailing every relevant action taken.
Stock options grant the holder the right to buy or sell stock at a pre-set price by a certain date and are commonly used as part of employee incentive plans, especially among executives.
Form 5: A Second Chance
When a transaction hasn’t been reported via Form 4, Form 5 can be filed within 45 days of the company’s fiscal year-end, providing a fallback to meet compliance regulations.
The SEC leverages the information disclosed in Form 4 for regulatory actions and to ensure transparency in market actions involving federal securities laws.
Expanding Your Knowledge: Forms Related to SEC Form 4
In addition to SEC Form 4, other forms crucial for company transparency include:
- 10-K: Annual financial report
- 10-Q: Quarterly financial report
- Form S-1: Initial stock issuance
- Form S-1A: Amendments to Form S-1
- 8-K: Unscheduled material events or corporate changes
- Schedule 13D: Reporting when an entity acquires over 5% of a company’s stock
The data provided in these filings aids the SEC in regulation and enforcement related to federal securities laws.
Navigating the Filing Process for SEC Form 4
Typically, parties must file SEC Form 4 electronically through the SEC’s EDGAR System. While exceptions can occur during periods of hardship, it’s imperative to file within two days of the triggering transaction.
For a downloadable version of the SEC Form 4: Form 4 PDF
Real-World Example: Elon Musk’s Form 4 Filing
In February 2020, Elon Musk, the CEO of Tesla Inc. (TSLA), filed SEC Form 4 indicating a material transaction involving Tesla’s stock. Mickey: The filing highlighted the essential details and compliance framework for such insider transactions:
- Section 1: Reporting person name (Elon Musk) and company address (Tesla Inc).
- Section 2: Company name (Tesla Inc).
- Section 3: Transaction date (February 14, 2020).
Furthermore, the specifics included in Table 1 revealed that Elon Musk acquired 13,037 shares at $767 per share, escalating his total number of shares owned to 34,098,597 post-purchase.
Related Terms: SEC, Equity, Stock, Securities Exchange Act of 1934, Investment Company Act of 1940.
References
- SEC.gov. “Forms 3, 4, 5”.
- SEC.gov. “Instructions for Form 4 Statement of Changes of Beneficial Ownership of Securities” Page 2.
- SEC.gov. “Edgar Search Results for Elon Musk”.
