--- title: Reading 10b5-1 Plan Footnotes on Form 4 Filings type: learn slug: reading-10b5-1-plan-footnotes-on-form-4 canonical_url: https://13finsight.com/learn/reading-10b5-1-plan-footnotes-on-form-4 published_at: 2026-05-13T08:48:33.450Z updated_at: 2026-05-13T08:48:36.407Z author: Sarah Mitchell author_title: Education Editor author_url: https://13finsight.com/authors/sarah-mitchell word_count: 1006 locale: en source: 13F Insight --- # Reading 10b5-1 Plan Footnotes on Form 4 Filings > When a CEO sells stock, the question is rarely 'how much' — it is 'is this discretionary or pre-arranged?' This guide walks through how to read the Rule 10b5-1 plan footnote on a Form 4 and what it actually changes about the signal. The single most common error in reading insider trading data is treating every CEO sale as a discretionary view change. The signal — and the lawsuit risk for any reader-turned-writer who frames it wrong — sits in a small footnote that the Form 4 either has or doesn't have: the Rule 10b5-1 plan adoption disclosure.What Rule 10b5-1 actually isRule 10b5-1 is an SEC safe harbor adopted in 2000 and materially amended in December 2022. It lets corporate insiders set up a written trading plan in advance — typically with a broker — that specifies when, how much, and at what price stock will be bought or sold. Once the plan is adopted (during a window when the insider has no material non-public information), the trades execute mechanically. The insider does not make the discretionary decision to sell on the day the trade clears; the plan does.The 2022 amendments added two requirements that affect how Form 4 disclosures look today:Mandatory cooling-off period: 90 days for officers and directors, or until the next earnings release if later. Plans adopted during a closed window cannot trade for that period.Mandatory plan adoption box on Form 4: A new check box and footnote requirement starting April 1, 2023 — every Form 4 reporting a transaction made under a 10b5-1 plan must explicitly indicate it.Where to look on a Form 4Open any post-April-2023 Form 4 on EDGAR and look for two specific pieces:The check box at the top of Table I or Table II labeled "Transaction(s) made pursuant to a Rule 10b5-1 trading plan." If checked, the transactions on that line were plan-driven.The plan adoption date footnote, typically referenced as "(1)" or "(2)" next to the transaction line. The footnote text usually reads: "These shares were sold pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on [DATE]."If neither the check box is marked nor a plan footnote appears, the transaction was discretionary. That distinction is the most important single fact in the filing.Why discretionary vs plan-driven mattersA discretionary sale is a real-time view: the insider chose to sell at this price, on this day, knowing what they knew. That is the foundation of every "insider selling = bearish signal" thesis.A plan-driven sale is a calendar event. The insider committed weeks or months earlier to sell N shares whenever the plan window opened, regardless of price or news. Reading a plan-driven sale as a bearish view change is the most common framing error in financial journalism — and the SEC has prosecuted insiders specifically for using plans incorrectly to mask discretionary trading.The visual signatures that suggest plan-driven tradingEven before you read the footnote, certain transaction patterns are highly suggestive of a 10b5-1 plan:Tightly clustered prices in same-day sequences — a sale broken into 5-10 tranches walking from $90.00 to $91.86 over a single trading day usually indicates a VWAP or trailing-sell algorithm running inside a plan window.Identical share lot sizes month after month — recurring sales of exactly 50,000 or 100,000 shares on the same day each month is mechanical, not opinionated.Consistent timing relative to earnings releases — sales that always clear 2-4 trading days after earnings are plan-driven; the post-earnings window is the standard time when 10b5-1 plans open. Discretionary sellers cluster less predictably.Avoidance of pre-earnings windows — a Form 4 that consistently shows zero activity in the 30 days before each earnings release is consistent with the company's blackout period; plan-driven trading respects blackouts mechanically.What the platform's data layer tells youWithin 13F Insight's data, you can verify the plan-driven thesis by looking at the full transaction history on an insider's profile page (e.g. the Anthony Wood Roku profile or the Charles Schwab profile) and scanning for:Repeating monthly cadence in the transaction date columnSame lot sizes (e.g., 50,000 shares) appearing across multiple monthsPrice walks within each multi-tranche day rather than single block printsThe "S" code (open-market sale) appearing in clusters — five S transactions on a single date is almost always a plan trancheWhen to be cautious about discretionary framingEven when the Form 4 footnote does NOT mention a 10b5-1 plan, that does not always mean the sale was a bearish view change. Other common non-discretionary patterns include:F (tax withholding) at RSU vest — the company forces the share withholding to cover income tax on a vested grant. Mechanical, not a view.M (option exercise) — converting compensation, not selling on conviction. Often paired with same-day S sales for cash settlement.G (gift) — the shares left the insider's account but went to a recipient (foundation, family member, charity), not the open market.C (conversion) — common for dual-class founders who convert Class B to Class A before selling. Usually paired with an S the same day; does not change the underlying conviction read.A practical reading checklistBefore writing or sharing a take on an insider Form 4, run through:Open the Form 4 on EDGAR. Confirm the transaction code (S vs M vs F vs G vs C).Check the 10b5-1 plan adoption box and footnote. Note the plan adoption date if present.Open the insider's full transaction history on a platform like 13F Insight's insider data hub. Look for monthly cadence, repeating lot sizes, and price walks.Cross-check Table I (Class A common) against Table II (derivative / Class B / indirect). The "shares owned after" zero on Table I is meaningless if Table II shows millions still held.Place the sale relative to the company's earnings calendar. Sales 2-4 days after a release are plan-driven; sales the trading day before a release are nearly impossible (blackout).Insider trading data is rich, but most of the richness comes from distinguishing the shape of the trade — not its size. A $50 million plan-driven sale is a non-event. A $5 million discretionary sale by a CEO 48 hours before a guidance cut is a serious signal. The Rule 10b5-1 footnote is what tells you which is which.For more on reading 13F and Form 4 filings, see the full Learn library. The SEC's rule text is publicly available at SEC Final Rule 33-11138 (2022 amendments to Rule 10b5-1). ## FAQ ### What is a Rule 10b5-1 trading plan? Rule 10b5-1 is an SEC safe harbor that lets corporate insiders set up a written trading plan in advance with a broker. The plan specifies when, how much, and at what price the insider will buy or sell stock. Once adopted during a window when the insider has no material non-public information, trades execute mechanically — the insider does not make discretionary decisions on the trade date. ### How do I tell if a Form 4 sale was made under a 10b5-1 plan? Look for two things on the Form 4: a check box at the top of Table I or II labeled "Transaction(s) made pursuant to a Rule 10b5-1 trading plan," and a footnote referencing a plan adoption date. Both have been mandatory since April 1, 2023. If neither is present, the transaction was discretionary. ### Why does the 10b5-1 distinction matter? A discretionary sale is a real-time view — the insider chose to sell at this price knowing what they knew, which is the basis for any bearish-signal interpretation. A plan-driven sale is a calendar event committed to weeks or months earlier; reading it as a view change is the most common framing error in insider analysis. The SEC has prosecuted insiders for misusing plans to mask discretionary trading. ### What patterns suggest a transaction is plan-driven even before reading the footnote? Tightly clustered prices in same-day sequences (e.g., 5-10 tranches walking from $90 to $92), identical share lot sizes recurring monthly, sales clearing 2-4 trading days after earnings, and consistent zero-activity in pre-earnings blackout windows are all visual signatures of mechanical plan-driven trading rather than discretionary selling. ### Do all insider sales need a 10b5-1 plan to be safe? No. Insiders can sell discretionarily outside a 10b5-1 plan provided they are not in possession of material non-public information at the time of trade and not within a company-mandated blackout period. The plan simply removes the timing-and-information question entirely by committing the trade in advance. ### What changed with the December 2022 amendments to Rule 10b5-1? The SEC added a mandatory cooling-off period (90 days for officers and directors, or until the next earnings release if later), required Form 4 disclosure of plan-driven transactions via a check box and footnote starting April 1, 2023, and restricted overlapping plans. Older plans grandfathered under the prior rules are increasingly rare three years on. --- Source: 13F Insight — https://13finsight.com/learn/reading-10b5-1-plan-footnotes-on-form-4 Author: Sarah Mitchell — https://13finsight.com/authors/sarah-mitchell Last updated: 2026-05-13T08:48:36.407Z