Last month, I blogged about White & Case’s report on the terms of publicly filed insider trading policies. Wilson Sonsini recently reviewed the terms of insider trading policies adopted by a particular subgroup of those companies – the SV 150. Here are some of their key findings:

Broad applicability of policies: Insider trading policies generally apply broadly to all directors, officers, employees, and other service providers, with 88 percent of the policies reviewed covering the foregoing persons and their affiliates. The list of persons subject to quarterly blackout periods and pre-clearance requirements is often narrowed to directors, officers, and a specified subset of employees or other service providers.

Quarterly blackout periods: Most of the insider trading policies reviewed impose quarterly blackout periods that commence two to four weeks before the then-current fiscal quarter-end (with two weeks being the most common timing), and end one or two trading days following the public release of quarterly earnings. Ten of the SV150 companies impose a longer quarterly blackout period for directors and senior-level employees, and a shorter quarterly blackout period for other employees and service providers.

Pre-clearance requirements: Most of the insider trading policies reviewed require certain insiders to obtain pre-clearance before trading even in an open trading window. Pre-clearance requirements are often limited to directors, officers, and employees with access to material nonpublic information (MNPI).

Treatment of gifts: Recent amendments to SEC rules require reporting of gifts by Section 16 filers on the same basis as open market sales and other disposition transactions, likely leading some companies to adjust policies with respect to gifts. Among the insider trading policies reviewed, most provide some restrictions on gifts and charitable contributions of securities, but approaches vary.

Restricted activities: hedging, pledging, and margin accounts: Nearly all insider trading policies prohibit hedging transactions involving company securities. Approximately 43 percent of insider trading policies permit pledging of company stock, with prior approval and/or only by certain company insiders, but only 27 percent of insider trading policies allow margin accounts, with similar approval and limitation structures.

I admit that I haven’t pored over the details of Wilson Sonsini’s findings, but at a glance it doesn’t seem that there’s much that differentiates the way that the SV 150 have approached their insider trading policies from the approach taken by public companies in other industries. That being said, White & Case did find that 20% of public company policies addressed shadow trading. Since Wilson Sonsini’s report didn’t mention the topic, perhaps this is an area where SV 150 companies are somewhat less restrictive than some of their more conservative counterparts in the broader public company group.

– John Jenkins