Public companies were required to file their insider trading policies as exhibits to their Form 10-K filings for the first time during the 2024 annual reporting season, and this Debevoise memo provides some insights about what the policies filed by 60 of those issuers – including 30 of the S&P 500 – had to say about key terms.  In recent years, the SEC has become increasingly skeptical about gifts of securities by insiders, and this excerpt from the memo says that companies appear to be taking that skepticism into account in their insider trading policies:

92% of policies impose some restrictions on the gifting of issuer securities, although the specific restrictions vary. Of those, 77% apply these restrictions to all covered persons prohibiting them from gifting issuer securities while in possession of MNPI or applying window periods or pre-clearance procedures to gifts of securities. Further, a small number of insider trading policies (3%) explicitly prohibit gifting of issuer securities when the donor knows or has reason to believe the donee will sell the securities while the donor has MNPI. For policies that do not restrict gifts for all covered persons, the restrictions typically apply to Section 16 officers and directors.

The memo also addresses practices concerning the persons subject to insider trading policies, the inclusion of issuer transactions within the scope of the policy, prohibited transactions, blackout periods and trading windows, the use of Rule 10b5-1 plans, treatment of shadow trading, and preclearance procedures.

– John Jenkins