Day Trading Encyclopedia

SEC Filings Form 144

Form 144

What it is

This is a notice of proposed sale of company stock filed by company executive insiders (officer, direct or affiliate) of their intention to sell shares of the company. Affiliates must file a Form 144 when the amount of sold exceeds 5,000 shares or $50,000 in proceeds within any three month period. The sale cannot exceed 1% of the total outstanding shares or the daily average trading volume for the shares during the prior four-week trading period. Transactions must be made through unsolicited broker accounts directly to market makers. Keep in mind this form is an intent to sell shares within a three month period. If the seller doesn’t sell any shares, then a new Form 144 must be filed again when they intend to sell. For restricted shares, a six-month holding period is mandatory prior to filing Form 144.

How to Read a Form 144

Form 144 provides the name of the seller, relationship to the issuer, type of securities (restricted or control shares), broker dealer, number of shares, aggregate market value, approximate date of sale and each securities exchange that shares will be sold through. The seller also has to disclose the date the shares were acquired and nature of the acquisition transaction, amount of shares and date of payment for the shares. The seller must also disclose the amount and value of the shares sold in the past three months and gross proceeds received on the sales.

Things to Look Out For

This is legal insider trading. However, since it is only an intent to sell, it’s very much like a bid and ask quote on the level 2 screen. The actual trade transaction is not made until it is printed on the tape or in this case, filed with a Form 4. Traders have to be careful not to over speculate on the filing of Form 144s and why they are filed. Assuming Form 144 filings are a negative indicator can be a big mistake. It’s best to track the Form 4 filings for actual insider sales.