Section 16—Rule 10b5-1 Disclosure Changes for SEC Filers

The U.S. Securities and Exchange Commission’s recent updates to insider trading rules aim to further level the playing field between investors and company insiders who have more information than they do. But the changes also include a few new dates and details SEC filers should know.

Timing of Rule 10b5-1 disclosure changes

The updates to Rule 10b5-1 of the Securities Exchange Act of 1934 affect all Section 16 reporting persons. This regulation significantly changes the timing and filing method for the reporting of bona fide gifts of securities as well as a new “affirmative defense conditions of Rule 10b5-1(c)” reporting requirement on Forms 4, 4/A, 5, and 5/A, beginning April 1, 2023, (no joke).

Here are important dates within the rule, which you can read in the Federal Register:

February 27, 2023: With the rule taking effect, bona fide securities gifts must now be reported on Form 4 and within two business days. (Reporting these gifts on Form 5, 45 days after year end, is no longer permitted.)
March 20, 2023: The release of EDGAR 23.1 will add a 10b5-1 affirmative defense checkbox to Forms 4, 4/A, 5, and 5/A. This technical change to the Ownership XML file format is a breaking change: A document created using an earlier version of the Ownership XML format will not be accepted by EDGAR. All filing agents will need to implement this change, even though the reporting person may, but is not required to, report the affirmative defense until filings submitted on April 3, 2023 (the first business day following the regulatory implementation date)
April 1, 2023: Reporting persons are required to comply with the Rule 10b5-1(c) affirmative defense conditions

Next steps

Ensure that all reporting of bona fide gifts of securities from here on out is performed on Form 4 within two business days of the event
Verify that your SEC reporting software vendor will be EDGAR 23.1 compliant on March 20, 2023 (Workiva SEC solution users, you are set!)
Prepare your organization to comply with the Rule 10b5-1(c)(1) affirmative defense to insider trading liability rules, including cooling-off periods, reporting requirements, and other conditions, effective April 1, 2023

Find more information from the SEC

News release: SEC Adopts Amendments to Modernize Rule 10b5-1 Insider Trading Plans and Related Disclosures
Fact sheet: Rule 10b5-1: Insider Trading Arrangements and Related Disclosure
Final rule: Final Rule: Insider Trading Arrangements and Related Disclosures

Danielle DaCosta

18. Mai 2023 20:08

When will the tags for insider trading plans/policies be available for the required disclosures in the 10-Q and 10-K?

Liz Habel

18. Mai 2023 20:50

Hi Danielle DaCosta ,

Thanks for your question! Workiva is intending to support the new ECD taxonomy in early June. All customers that require disclosure and tagging of insider trading disclosures under this mandate will be required to migrate to the US-GAAP 2023 taxonomy since the SEC will only support the combination of the ECD taxonomy with the 2023 US-GAAP taxonomy. If a user has already performed the 2023 US-GAAP taxonomy migration they will not need to perform an additional migration in order to gain access to the ECD taxonomy elements required to use in tagging those insider trading disclosures.

We also have an upcoming Community post in the works to help answer some questions about this, so keep your eyes peeled! Please let us know if you have any more questions in the meantime :)

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Eric Larsen

21. Juli 2023 16:00
Bearbeitet

Liz Habel I haven't been able to find the community post you mentioned -- are there any Workiva resources that explain which tags are needed for this disclosure?

UPDATE: I found the article just after I posted: https://support.workiva.com/hc/en-us/community/posts/15797032475028-Insider-Trading-Arrangements-Quarterly-Disclosure-and-Tagging-Requirements-Are-you-Ready-