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SEC Form 3 is required to be filled out when an individual becomes an insider in a firm, ing to specific SEC rules. The individual will need to disclose their ownership of company shares. SEC Form 4 needs to be filled out when there is any change in the ownership of a company's stock.
What's a Form 4? In most cases, when an insider executes a transaction, he or she must file a Form 4. With this form filing, the public is made aware of the insider's various transactions in company securities, including the amount purchased or sold and the price per share.
Federal law defines an ?insider? as a company's officers, directors, or someone in control of at least 10% of a company's equity securities.
Form 4 filings can help investors identify transactions that top corporate insiders such as CEOs, CFOs, and Chairmen have made in US publicly listed companies. This is valuable because corporate insiders have a genuine information advantage over other investors.
Form 4 is required to be filed by a company or the individual at the company when there is a change in the holdings of company insiders. Form 4 must be filed with the SEC within two days of the transaction.