What is a 'Form 4'

Form 4 is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders. Insiders consist of directors and officers of the company, as well as any shareholders, owning 10% or more of the company's outstanding stock.

The filing of Form 4 relates to Sections 16(a) and 23(a) of the Securities Exchange Act of 1934, as well as Sections 30(h) and 38 of the Investment Company Act of 1940. Disclosure of information required on Form 4 is mandatory and becomes public record upon filing.

BREAKING DOWN 'Form 4'

This two-page document covers any buy-and-sell orders on the open market, as well as the exercise of company stock options. A Form 4 is mandatory within two business days starting from the end of the day the material transaction occurred. This filing is related to Form 3 and the Form 5, which also cover changes to the company insider holdings.

The SEC has the capacity to use information disclosed on Form 4 in investigations or litigation involving federal securities laws, in addition to other civil, criminal, or regulatory statutes or provisions. The SEC is able to use the information in referral of a case to other governmental authorities and self-regulatory organizations (SROs). If a party fails to disclose required information on a Form 4, civil or criminal actions could result. In general a party must file Form 4 electronically via the Commission’s Electronic Data Gathering Analysis and Retrieval System (EDGAR). Exceptions can occur during a hardship.

Practical Example of Form 4

In December 2017 the Chief Administrative and Internal Operations Officer of the public company TiVo (ticker: TIVO) filed Form 4 as an individual. The form disclosed the physical address of TiVo in San Jose, CA, the date of transaction of common stock; transaction code; amount and price of securities transacted; and amount of securities beneficially owned following the transaction.

Forms Related to SEC Form 4

Several other forms are critical to maintaining transparency and recording the actions of public company executives, officers, and directors. These include the annual report 10-K, the quarterly 10Q, S1 and S1-A forms upon going public, the 8K for unscheduled material events or corporate changes, and others.

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