How can I tell if an insider sale was made under a 10b5-1 plan?

Since March 2023, Form 4 has a checkbox that is ticked when a transaction was made under a Rule 10b5-1(c) plan. On older filings, look for a footnote mentioning a 'trading plan', 'Rule 10b5-1' or '10b5-1'. If neither is present, treat the sale as discretionary.

Does a 10b5-1 sale mean the insider is bearish?

Usually not. A plan sale executes instructions set months earlier, often to convert equity compensation into cash on a schedule. It reflects a decision from when the plan was adopted, not a current view. Purchases, by contrast, are almost never planned.

When is a planned sale still worth attention?

When the plan was adopted shortly before selling began. The timing of when an insider chooses to set up a plan carries information even though the trades themselves are automatic. The 2022 SEC amendments added cooling-off periods to curb the worst version of this.

That Insider Sale: Scheduled Plan or Real Signal?

Headlines love an insider sale. "CEO dumps $6M of stock" writes itself. Most of the time it should read "a schedule the CEO set up last year executed on time", which is a worse headline and a more accurate one.

Work through whether a specific sale is scheduled or discretionary:

Step 1

Is the 10b5-1 checkbox on the Form 4 ticked?

Why the distinction is everything

Rule 10b5-1 lets an insider set up a written trading plan in advance — amounts, prices, dates — at a moment when they hold no inside information. Trades that later execute under the plan get an affirmative defence against insider-trading liability, because the decision predates the information.

The consequence for reading the data: a plan sale tells you what the insider thought when they adopted the plan, which could be eighteen months ago. It says close to nothing about what they think today. And because most equity compensation has to be converted to cash somehow, most large insider selling runs through a plan.

The 2022 tightening

After years of research showing the defence was being gamed — plans adopted days before good news, plans cancelled when convenient, overlapping plans that let insiders keep whichever performed — the SEC tightened the rule in December 2022:

Cooling-off periods. Directors and officers wait the later of 90 days or two business days after the next quarterly results before the first trade under a new plan. Everyone else waits 30 days.
No overlapping plans for open-market trades, in general.
One single-trade plan per twelve months.
A Form 4 checkbox, machine-readable, since EDGAR release 23.1 in March 2023.

The residual signal in a planned sale

The trades are automatic; the decision to adopt the plan is not. A plan set up right before a stretch of heavy selling is the pattern the cooling-off rules were written to stop, and even under the new rules the timing of adoption is informative. Plan adoptions and terminations by directors and officers are disclosed in company quarterly reports, not on Form 4.

The short version

Ticked checkbox, or a footnote naming a plan, adopted well before the trade: scheduled, low signal, move on. No plan and a meaningful size against what the insider still holds: discretionary, and part of the small slice of insider selling actually worth reading. A recent plan is the middle case — planned trades, but adopted at a moment that itself says something.