Directors, officers and 10 percent holders, explained

If you are reading a Form 4 and wondering who had to file it, the answer is narrower than most people assume. In US securities law an insider is not simply anyone who works at the company or knows something useful. For disclosure purposes it is a defined list: directors, officers, and anyone who beneficially owns more than 10 percent of a class of the company's registered equity securities.

That definition sits in Section 16 of the Securities Exchange Act of 1934. The SEC states it plainly in its guidance for smaller reporting companies: Section 16 applies to a reporting company's directors and officers, as well as shareholders who own more than 10 percent of a class of the company's equity securities. Those three groups are the ones whose trades land in the public record within days.

Everyone else with an information advantage, the middle manager, the auditor, the lawyer's assistant, is still bound by insider trading law. They simply do not file anything. That gap is the most useful thing to understand before you start reading insider data.

The legal definition sits in Section 16

Section 16 does two jobs. It forces a defined group to report their holdings and trades, and it discourages them from trading in and out over short periods. The SEC notes that Section 16 also establishes a mechanism for a company to recover short swing profits, meaning profits an insider realises from a purchase and sale of the company's security occurring within a six month period.

Reporting happens on three forms. Form 3 is the initial statement of holdings, filed within 10 days of becoming an insider. Form 4 reports changes in beneficial ownership. Form 5 is the annual tidy up for anything eligible for deferred reporting, generally due no later than 45 days after the company's financial year ends. Our guide to when insiders have to disclose trades covers the timing.

Directors are the simple case. If you sit on the board, you are in. Officers need more explaining.

Officer means more than the corner office

SEC rules define an officer for Section 16 purposes as an issuer's president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice president of the issuer in charge of a principal business unit, division or function such as sales, administration or finance, any other officer who performs a policy making function, or any other person who performs similar policy making functions for the issuer.

Notice what that is doing. It is a function test, not a title test. A vice president running a small support team is probably outside it. A vice president running global sales is probably inside it. Someone with a modest title who sits where strategy is set can be caught by that final clause about similar policy making functions.

This matters when you read filings. The role description on a Form 4 comes from the filer, so the checkbox marked director, officer or 10 percent owner tells you more than the job label does.

The 10 percent holder, and a change for foreign companies

The third group is the large shareholder. Anyone who beneficially owns more than 10 percent of a registered class of equity securities is a Section 16 insider and files the same forms as a director.

Beneficial ownership here follows the Section 13(d) tests, which look at voting and investment power rather than whose name appears on the register. That is how a fund family, a founder's trust or a group acting together can all end up above the line.

Below 10 percent there is a separate regime. An investor crossing 5 percent of a covered class files a Schedule 13D or 13G rather than a Form 4, and keeps reporting until the holding drops back below 5 percent. The SEC shortened the initial Schedule 13D deadline from 10 days to five business days in its 2023 beneficial ownership amendments, with 13D amendments due within two business days. Those filings describe position building rather than individual trades.

One recent change is worth flagging. Directors and officers of foreign private issuers were exempt from Section 16 reporting for decades. Under the Holding Foreign Insiders Accountable Act, the SEC adopted final amendments in February 2026 removing that exemption, while excluding 10 percent holders of foreign private issuers from the Form 3 requirement. If you follow US listed foreign companies, their insider record is new and therefore short.

There is a second, wider meaning of insider

Everything above concerns who files. Insider trading law uses the word far more broadly.

The SEC describes illegal insider trading as buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, non public information. It has brought actions against corporate officers, directors and employees, against friends and family members who traded on tips, against employees of law, banking, brokerage and printing firms who picked something up through client work, and against people who misappropriated confidential information from employers or relatives.

None of them file a Form 4 unless they also happen to be a Section 16 insider. The disclosure record and the enforcement record cover different populations. When someone says the insiders are buying, they mean the filers.

Why the definition decides what you get to see

Because the filing group is defined by role rather than by knowledge, insider data has a particular shape.

It is complete for the people inside the definition and silent about everyone outside it. It leans towards senior management and large holders, which is useful, since those are the people who read the board pack. And it carries a lot of routine activity that says nothing about anyone's view on the price. Option exercises, tax withholding on vesting shares, grants and gifts all appear alongside genuine open market purchases.

That is why the transaction code on a Form 4 matters more than the headline figure. A discretionary open market purchase by a chief executive reads differently to a scheduled disposal, and telling them apart is most of the skill. Our explainer on what insider buying actually means works through it, and the running list of stocks insiders are buying shows the raw flow.

How InsiderPulse handles this

InsiderPulse reads Form 4 filings from SEC EDGAR and treats them as one input among several. The filings tell us which Section 16 insiders traded, in what size and under which transaction code, and that feeds into the 0 to 100 score alongside congressional trade disclosures, options activity, dark pool and volume data, prices and news. Insiders To Follow groups activity by filer, so you can see who at a company has been reporting. We do not claim the filings reveal more than the insider was required to report, and we do not present them as a reason to act.

InsiderPulse is a data tool. Nothing on this page is financial advice.