Insider and Congress Trading Glossary: 32 Terms Explained

Plain-English definitions of the terms used in insider filings, Congress trade disclosures and 13F reports, from 10b5-1 to Form 4 and MNPI.

A quick reference for the vocabulary of public trading filings.

Filings and forms

Form 3. Initial ownership statement of a new insider. Details.

Form 4. Report of a change in an insider's holdings, due within two business days. How to read it.

Form 5. Annual catch-up report for exempt or unreported items.

Form 144. Notice of a proposed sale by an affiliate. Details.

Form 13F (13F-HR). Quarterly report of long equity positions by managers with $100M or more. Explained.

Schedule 13D / 13G. Filings by holders of more than 5% of a company. Explained.

PTR (Periodic Transaction Report). The filing members of Congress make for securities trades. Field guide.

EDGAR. The SEC's public filing database. Beginner's guide.

People and roles

Insider. For Section 16: a director, officer or beneficial owner of more than 10% of a class of equity.

Affiliate. Someone who controls, is controlled by or is under common control with the company.

Beneficial owner. A person with voting or investment power over shares, even if not registered in their name.

Reporting person. The person who files a Form 3, 4 or 5.

Transaction terms

Open-market purchase (code P). Buying shares on the market with the insider's own money.

Open-market sale (code S). Selling shares on the market.

Award or grant (code A). Shares given by the company as compensation.

Exercise (code M or X). Converting an option into shares.

Tax withholding (code F). Shares surrendered to cover exercise price or taxes.

Derivative. An option, warrant or similar instrument whose value depends on the shares.

Direct / indirect ownership. Held personally versus through a trust or entity.

Legal concepts

MNPI. Material nonpublic information. Legal vs. illegal trading.

Rule 10b5-1 plan. A pre-arranged trading plan giving an affirmative defense. Explained.

Cooling-off period. The mandatory wait between adopting a plan and first trade.

Section 16(b). The rule letting a company recover profits from insider trades made within six months.

STOCK Act. The 2012 law requiring disclosure of trades by members of Congress. Explained.

Analysis terms

Cluster buying. Several insiders buying the same company in a short window. Explained.

Abnormal return (alpha). Return beyond what the market and risk factors predict. Research.

Mimicking portfolio. A hypothetical portfolio that copies disclosed trades.

Turnover. How much of a portfolio changes over a period.

Concentration. The share of a portfolio in the largest positions.

Disclosure lag. The delay between a trade and its public filing.

Long-only. Reporting only owned positions, not short ones, as in 13F.

Amount range. The band (such as $15,001 to $50,000) used in congressional filings instead of exact values.

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