What Is a Blackout Period?

A blackout period is a term that often refers to a temporary period in which access is limited or denied. This term is often in regards to contracts, policies and business activities. For example, when a political party is unable to advertise for a set amount of time before an election, they are said to be subject to a blackout period.

In investing, a blackout period refers to a period of around 60 days during which employees of a company with a retirement or investment plan cannot modify their plans. A notice must be given to employees in advance of a pending blackout. In a firm, a blackout period may happen because a plan is being restructured or altered.


The number of days in which employees of a company with a retirement or investment plan cannot modify their plans.

SEC Protections

The Securities and Exchange Commission (SEC) protects employees during blackout periods. This protection is so that employees are not at a disadvantage, and keeps directors and executive officers from purchasing or selling securities during the blackout.

The primary purpose of blackout periods in publically traded companies is to prevent insider trading. For this reason, some employees who work for publically traded companies might be subject to blackout periods, because they have access to insider information about the company. The SEC prohibits employees, even top company officials, from trading based on company information that has not yet been made public, and blackout periods help to enforce that rule. That’s why publically traded companies may enforce blackout periods whenever insiders may have access to material information about the company, such as its financial performance. For example, a company may impose recurring blackout periods each quarter in the days before the release of an earnings report. Other events that can trigger a blackout period can include mergers and acquisitions, the imminent release of new products, or even the release of an initial public offering.

Financial analysts may also be subject to blackout periods regarding the public offerings they research. Since 2003, analysts are subject to a blackout period during which they are not allowed to public research on initial public offerings before they begin trading on the open market. This blackout period can last for up to 40 days after the IPO enters the market.

Using Blackout Periods to Protect Employee Retirement Plans

Blackout periods are also used to protect employee retirement plans. While employees are allowed to make frequent changes to their portfolios and financial contributions, blackout periods give fund managers a chance to perform necessary maintenance that protects these investments, including accounting and periodic review. A blackout period ensures that employees aren’t buying new shares while fund managers are trying to actively manage the funds.

Real World Example

For example, if a pension fund is shifting from one fund manager to another at a different bank, this restructuring would cause a blackout period at the firm. Such a blackout period would give the firm time to make the transition from one fund manager to another while minimizing the impact on employees who depend on their retirement contributions. Blackout periods are therefore a valuable tool for protecting employee retirement plans and fund contributions.