A Form 144 is a document filed with the SEC by any holder of restricted stock who intends to sell those shares. The filer is then permitted, but not required, to sell the restricted shares at any time within 90 days after the Form 144 is filed. Form 144s are public filings; however, the vast majority of forms are not available on EDGAR as they are filed on paper with the SEC.
For the purposes of analyzing insider trading, we consider Form 144s as an "intent to sell," indicating that an insider wants to have the opportunity to sell shares over the next three months. While less of a definitive signal than a completed sale, Form 144 filings can shed light on how a insiders value their companies. The second page of these filings also includes information on how the shares were acquired and sales sold by the insider in the past three months.
People can hold restricted stock for a variety of reasons that differ from company to company. Following are two of the more common reasons:
(1) options granted to insiders become restricted stock when exercised;
(2) original investors and founders are often holders of restricted stock.
Trusts and related entities that plan to sell restricted stock are also required to file these forms. However, if the filer is an insider (or related to an insider), they will have to file a Form 4 if and when they actually sell the restricted stock. The Washington Service has created a proprietary system that connects insiders with their trusts and other entities. As a result, EZ-Insider users can see all related filings in a single table.
Officers and directors of many foreign issuers traded on U.S. stock exchanges are not required to file a Form 4. However, they are still required to register proposed sales of restricted stock on a Form 144. Consequently, the 144 is the only source of information on insider stock sales at these companies.
Given that Form 144 filings are received via a physical paper copy with the SEC and disseminated through the SEC Reading Room, social distancing restrictions related to COVID-19 have disrupted the normal dissemination of these filings. Please see our recent Form 144 Broker Market Share Report for more information about the ongoing disruption.