Orrick reported the following insider trading policy practice trends based on its review of Form 10-Ks filed by accelerated filers or large accelerated filers in the software sector (22 companies) and life sciences sector (21 companies) as of May 31, 2024.
MNPI—The majority of software companies prohibit trading in the company’s securities for one full trading day after release of material non-public information (“MNPI”). A plurality (43%) of life sciences companies prohibit trading in the company’s securities for two full trading days, with one full trading day being a close runner up (38%).
Shadow trading—Nearly two-thirds of software companies and more than half (57%) of life sciences companies restrict trading in the securities of another company.
Blackout periods—Quarterly blackout periods begin two to three weeks before quarter-end for the majority, and most commonly end one full trading day after the earnings release, for companies in both sectors.
Blackout list—Blackout periods typically apply to all Section 16 officers, either all employees or a subset of individuals that have regular access to MNPI (as adjusted from time-to-time), and certain defined family members and/or controlled entities of all such persons.
Gifts—Most policies explicitly address gifts. Of those that do, a majority of both software and life sciences companies prohibit gifts when in possession of MNPI and subject gifts to pre-clearance requirements.
The post includes practice tips to assist companies with determining the policies and practices that are most appropriate based on their specific facts and circumstances.