28% close their trading window more than 25 days before the end of their fiscal quarter.Īlmost half (48%) of companies allow trading to recommence two trading or calendar days after earnings are announced.32% close their trading window 11 to 15 days before the end of their fiscal quarter.Eighty percent of companies close their trading window 11 days or more before the end of their fiscal quarter: Quarterly blackout periods coincide with the end of fiscal quarters and are lifted shortly after earnings are released. Infogram Trend 3: Blackout periods are typically two weeks to a month in length. Low-Ranking Employees Subject to Blackout Periods We can also see that tech companies are more likely to subject lower-ranking employees to blackout periods that non-tech companies.Ĭlick through the interactive chart below to see how practices in this area change by company size and industry. On the other hand, for large companies (more than 10,000 employees), these percentages drop to 53%, 41%, and 30%, respectively. The percentage of small companies (less than 1,500 employees) that impose blackout periods on middle management, other exempt, and nonexempt employees increases to 81%, 66%, and 44%, respectively. Overall, middle management employees are subject to quarterly blackouts at only 61% of companies, other exempt employees at 47% of companies, and nonexempt employees at 35% of companies.īut if we compare practices by company size, we see that the percentage of companies that impose blackout periods at these employee levels increases for smaller companies and decreases for larger companies. We see considerably more variation in practice for lower ranking employees. Trend 2: Lower ranking employees are more likely to be subject to blackout periods at smaller companies. Employees with access to financial or material nonpublic information (90% of companies).Other senior management (94% of companies).Section 16 executives (subject to quarterly blackout periods at 98% of companies).It probably comes as no surprise to learn that most public companies use quarterly blackout periods to discourage insider trading and that the following four groups of individuals are most likely to be subject to these quarterly blackout periods: Trend 1: Executives are subject to blackout periods at virtually all public companies. Check out the latest episode of the NASPP’s Equity Expert podcast series, " Trends in Insider Trading Compliance" in which Jenn Namazi and I chat about findings on insider trading compliance from the survey, including whether stock plan administration is commonly responsible for Form 4 and Form 144 filings. The 2020 survey also reports trends in pre-clearance procedures, Rule 10b5-1 plans, and other aspects of a well-rounded insider trading compliance program. For today’s blog entry, I discuss four trends in blackout period design from the NASPP/Deloitte Consulting 2020 Domestic Stock Plan Design Survey.īlackout periods are just one component of insider trading compliance. Even so, there are many nuances to consider, including who should be subject to them, which transactions are prohibited, and what periods should the blackouts be in effect for. Trading blackouts are arguably a blunt (but effective) instrument. Over time, trading blackout periods have emerged as one concrete way companies can demonstrate that they discourage insider trading. The SEC requires public companies to create an environment in which employees are discouraged from insider trading companies that fail to do this can be held liable for any insider trades by their employees. While not mandated under law, the use of blackout periods is a nearly universal component of the insider trading compliance programs of most publicly held companies.
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