December 16, 2021
Comments attached.
All the elements of the proposal should enhance the clarity and information content of Form 4 filings. They will fill the gaps alluded to by Chairman Gensler.
However, I am concerned about the following element not going far enough:
\"Insiders that report on Forms 4 or 5 would have to indicate via a new checkbox whether the reported transactions were made pursuant to a Rule 10b5-1(c) or other trading plan.\"
So, what is really needed by the investment community is a way to separate repetitive, automatic 10b5-1 plan transactions from episodic/opportunistic transactions (which have much more information value). That is, the details of a 10b5-1 plan are nice to know and guardrails to prevent abuse by insiders are certainly helpful, but what is most value added is knowing when an insider is either buying or selling shares opportunistically. The information content in these transactions dwarfs those of 10b5-1s.
With companies increasingly using stock compensation as critical and standard portion of overall employee compensation, the number of 10b5-1 plans and their filings have exploded over the past decade. Investors need a way to immediately discern which filings they should pay more attention to - the opportunistic/episodic ones rather than the 10b5-1 filings.
Accordingly, I request the SEC consider a different filing - call it Form 4A or Form 4X or whatever - that is ONLY for non-10b5-1 filings. This way, investors can screen Edgar, Bloomberg, FactSet, etc. for that unique filing to determine when an insider is opportunistically purchasing or selling shares in their own company. Having to sift through every Form 4 filing to see which box is checked will overwhelm the process for most investors (especially retail investors) since they lack the ability to program software bots to automate such discovery.
Chip Morris