Year Two of Filing Insider Trading Policies: Hot Topics and Sector Trends

In 2022, the Securities and Exchange Commission (SEC) adopted rule changes requiring disclosure of whether public companies have adopted policies and procedures governing transactions in the company’s securities by its directors, officers, employees, and the company itself that are reasonably designed to prevent insider trading, as well as the filing of those policies and procedures as exhibits to the company’s Annual Report on Form 10-K or Form 20-F. Companies began complying with these disclosure and exhibit filing requirements beginning in 2024, so we have now experienced more than two years of insider trading policy disclosures, providing an excellent opportunity to benchmark practices and observe key trends.

To assess how market practice is evolving, we reviewed insider trading policies filed during the 2025–2026 annual reporting season across several industries and market capitalizations. Where possible, we reviewed the policies of 25 randomly selected companies within each category. In certain categories, fewer than 25 companies had filed insider trading policies with their annual reports. Because some companies fall within multiple industry classifications, certain companies may be reflected in more than one category discussed below.

We grouped companies by market capitalization, using a $5 billion threshold to distinguish between small-cap and large-cap issuers. For the life sciences and pharmaceutical sectors, we also separately analyzed pre-revenue companies, defined as companies reporting less than $25 million in annual revenue.

Our review focused on several areas where market practice continues to evolve, including:

• restrictions on trading in other companies, including approaches to shadow trading
• quarterly restricted trading periods, including timing and employee coverage
• treatment of prediction markets
• preclearance requirements for gifts
• restrictions on pledging securities and margin accounts
• applicability of insider trading policies to consultants and other non-employees
• Rule 10b5-1 trading plan requirements and company-specific restrictions that exceed SEC requirements

The sectors included in our survey are summarized below.

Below, we describe trends across the different categories of companies for each of these focus areas:

1. Prohibition on Trading in Other Companies

Does the Policy Apply to All Other Public Companies or a Subset?

Most insider trading policies include a prohibition on trading in the securities of another company while in possession of material nonpublic information (MNPI) concerning that company. Policies generally take one of two approaches: They either prohibit trading in any public company when in possession of MNPI about that company that they learned in the course of their work or limit the prohibition to other public companies with which the company has a relationship, such as customers, suppliers, business partners, or entities with which it is engaged in strategic discussion.

Across virtually all sectors, the dominant approach is to prohibit transacting in the securities of any public company while in possession of MNPI regarding that company rather than limiting restrictions to customers, suppliers, collaborators, or other business counterparties. However, several sector-specific differences emerged:

• Nearly all technology companies adopt broad MNPI-based prohibitions that apply to trading in any public company (92% of large-cap technology companies).
• Banks and other financial services companies were more likely to limit restrictions to engaged counterparties and other companies with which they have a business relationship, although approximately 60% still applied the prohibition broadly. Small-cap financial services companies were more likely to adopt the broader approach, with 80% applying restrictions to all public companies.
• Real estate companies, including REITs, were more evenly divided, with approximately 50% to 60% adopting broad prohibitions.
• Life sciences and pharmaceutical companies showed the greatest variation. Among large-cap life sciences companies, 47% prohibited transacting in the securities of any public company while in possession of MNPI, 37% limited restrictions to business counterparties or other companies with a relationship to the company, and 16% did not address the issue. Smaller and pre-revenue life sciences and pharmaceutical companies were more likely to focus on collaborators, licensors, clinical partners, and other relationship-based companies.

These results suggest that most issuers continue to favor broad, principles-based restrictions, although life sciences and pharmaceutical companies remain more likely to tailor prohibitions to the specific counterparties and collaborators most relevant to their businesses.

Shadow Trading

In SEC v. Panuwat, the SEC successfully pursued an insider trading claim based on a theory that an individual in possession of MNPI about one company may incur insider trading liability by trading in the securities of a different company whose stock price could be affected by disclosure of that information. The case has become the leading example of so-called “shadow trading” liability and has prompted many companies to evaluate whether their insider trading policies adequately address trading in the securities of other companies.

Despite court rulings upholding the SEC’s theory, the Panuwat case has been generally viewed by those outside the SEC as a novel and/or aggressive theory of insider trading liability. To date, there has been only one additional action (a settled case) that appears to rely on shadow trading theories. It is unclear whether this or future commissions will pursue these kinds of cases.

We were interested to see whether companies revised their insider trading policies in response to Panuwat or whether newly adopted policies addressed shadow trading expressly. Broadening the scope of companies covered by a company’s insider trading policy could expand the duty owed by company insiders under the policy and increase their exposure to insider trading claims. Conversely, policies that limit restrictions to customers, suppliers, collaborators, and other business counterparties may narrow the scope of those duties. Importantly, even in the absence of an express shadow trading prohibition, the SEC may still pursue a shadow trading theory based on other duties arising from employment, confidentiality obligations, or fiduciary duties owed to the company.

Across all sectors, explicit shadow trading provisions remain relatively uncommon, appearing in fewer than 20% of the policies reviewed. Adoption rates were somewhat higher in the technology (31%) and real estate (32%) sectors. Many companies did not expressly prohibit shadow trading but included cautionary language advising employees to exercise care when transacting in the securities of companies that could be affected by confidential information learned through their employment. Among the companies that addressed shadow trading directly, approaches varied considerably. Some policies expressly referenced “shadow trading,” while others prohibited transacting in the securities of economically linked companies, competitors, companies with highly correlated stock price movements, or companies that could be affected by MNPI concerning the issuer.

Despite the attention generated by Panuwat, our review suggests that most companies continue to rely on broader insider trading principles rather than adopting express shadow trading prohibitions. Companies evaluating updates to their insider trading policies may wish to consider whether additional guidance regarding trading in the securities of economically linked companies is appropriate.

2. Prediction Markets

The growing popularity of prediction markets has raised questions regarding the potential misuse of MNPI in connection with contracts tied to corporate events, business outcomes, and other real-world events that may be affected by confidential information. Despite increased attention to these platforms, prediction markets have had little discernible impact on insider trading policy drafting.

Of the hundreds of insider trading policies reviewed, only one expressly addressed prediction markets. That policy prohibited employees from participating in prediction markets relating to the company and from using confidential company information when engaging in prediction markets involving other subjects.

The near absence of prediction market–specific provisions suggests that most issuers currently view existing insider trading, derivatives trading, and confidentiality restrictions as sufficient to address these risks. In particular, many companies appear to rely on prohibitions relating to derivative instruments tied to company securities, as well as broader code of conduct provisions prohibiting the misuse of confidential information for personal benefit.

Although prediction markets remain a developing area, continued growth of these platforms may prompt companies to evaluate whether existing insider trading and compliance policies adequately address participation in markets linked to corporate events, business outcomes, and other developments that may be influenced by MNPI.

3. Rule 10b5-1 Trading Plan Provisions

Our review indicates that most issuers have updated their insider trading policies to reflect the SEC’s 2023 amendments to Rule 10b5-1, but relatively few have adopted mandatory trading plan requirements or extensive restrictions beyond those required by the rule.

We focused on two considerations: whether companies require directors or executive officers to use Rule 10b5-1 trading plans for transactions in company securities and whether the policies impose restrictions that go beyond those required by the SEC rules that took effect in February 2023 (e.g., minimum cooling-off periods, no overlapping plans, no more than one single trade plan in a year, and plans must be entered into in good faith). Our review was limited to those companies that include Rule 10b5-1 trading policies in their publicly filed insider trading policy.

With respect to mandatory usage, there is near unanimity across sectors that directors and executive officers are not required to conduct all transactions in company securities pursuant to a Rule 10b5-1 trading plan.

With respect to additional restrictions, nearly all policies impose an advance notice period for internal review of proposed trading plans (e.g., at least five business days before adoption). It is also common for policies to include provisions that allow for the company to impose additional, unspecified conditions prior to approving a proposed plan, as well as to include a requirement that the plan must allow the company to direct the broker to suspend or terminate the plan under certain circumstances.

Beyond those relatively common provisions, approximately 25% of policies include additional restrictions. We did not observe a pattern across industries or market capitalizations. More common supplemental restrictions included:

• minimum and/or maximum term lengths for the plan (most common were six months and two years, respectively)
• prohibitions on hedging transactions involving securities subject to the plan
• limits on the number of plan amendments permitted during a 12-month period
• cooling-off periods following voluntary plan terminations
• restrictions on engaging in transactions outside an approved plan
• limits on which individuals may utilize trading plans
• requirements to use specific brokerage firms

A small number of companies adopted more bespoke provisions. For example, some prohibited plans that would execute trades during regular quarterly restricted trading windows, while others provided for automatic termination upon specified events, such as termination of employment, divorce proceedings, or bankruptcy filings.

4. Preclearance of Gifts

A strong consensus has emerged regarding gift transactions. Approximately 85% of the policies reviewed require persons who are subject to preclearance procedures to obtain approval before making gifts of company securities. Notable exceptions included large-cap banks (73%) and pre-revenue life sciences companies (68%).

The prevalence of gift preclearance requirements suggests that many issuers view gifts as presenting similar compliance and administrative considerations as open-market transactions, particularly where questions may arise regarding possession of MNPI at the time of the transfer.

5. Sector Trends in Quarterly Trading Restrictions

Restricted trading window provisions remain one of the areas with the greatest variation among insider trading policies. While most companies limit trading during the period leading up to quarterly earnings releases, significant differences exist regarding when restricted trading windows begin and end and which employees are subject to those restrictions.

Our review found that the commencement of restricted trading windows is generally articulated more clearly than the reopening of trading windows following earnings releases. Across industries, trading restrictions most commonly begin during the final two weeks of a fiscal quarter, although the precise timing varies considerably. By contrast, policies take a wide range of approaches to determining when trading may resume following an earnings release, resulting in greater variation among issuers.

The data below highlights these differences across sectors and market capitalizations.

Restricted Trading Window Start Dates

Reopening of Trading Following Earnings Releases

Although trading window commencement provisions are relatively straightforward, policies vary considerably regarding when trading may resume following an earnings release. Some companies permit trading to resume after a single trading day has elapsed, while others require two or more trading days. Policies also differ in whether reopening is measured from the timing of the earnings release, the date of the release, trading days, business days, or trading sessions.

Several trends emerged from our review. Larger technology, life sciences, pharmaceutical, and financial services companies were generally more likely to permit trading to resume sooner following earnings releases, particularly where earnings were announced before market open. Smaller issuers were more likely to require one or more additional trading days to elapse before trading could resume. We also observed significant variation in how policies address earnings releases made outside regular market hours, suggesting that many companies continue to take different approaches to balancing administrative simplicity and insider trading risk.

Companies should consider how the timing of earnings releases interacts with their provisions governing the reopening of the trading window. The practical effect can vary significantly depending on whether earnings are released before market open or after market close. For example, where earnings are announced before the market opens, a policy permitting trading after one trading day may allow trading to resume as early as the following trading day. By contrast, if the same earnings are announced after the market closes, the first trading session following the announcement may be viewed as the market’s initial opportunity to absorb the information, causing the policy to effectively delay trading by an additional day. As a result, companies should evaluate not only the number of trading days that must elapse before the window reopens but also how those days are counted and whether the policy appropriately addresses announcements made outside regular market hours.

The data below highlights these differences across sectors and market capitalizations. To illustrate the impact of the timing of the public release of information, we have provided two tables and assumed an earnings release on a Monday. In compiling the tables below, we treat trading days and business days differently, which matters primarily in instances where a company releases earnings before market open. We count the day of the pre-market release as a completed trading day but not as a completed business day. When a policy provides that the blackout ends on a specific day without specifying whether it is the end or the beginning of that day, we assumed the beginning. For example, if a policy provides that trading may begin on the second trading day after an earnings release, for a release that occurs on a Monday, we interpret that language as allowing trading to begin on Tuesday for a pre-market Monday release and on Wednesday for a post-market Monday release.

Monday Pre-Market Release – When Trading Window Opens

Monday Post-Market Release – When Trading Window Opens

Restricted Trading Window Coverage

While quarterly trading restrictions are nearly universal among public companies, there remains substantial variation regarding who is subject to those restrictions. Some companies apply quarterly restrictions to all employees, while others limit them to directors, executive officers, and other designated insiders.

The data below highlights these differences across sectors and market capitalizations.

The data suggests that financial institutions are generally more likely to limit quarterly trading restrictions to a subset of employees, while technology, pharmaceutical, and certain life sciences companies are more likely to apply restrictions more broadly. These differences likely reflect variations in organizational structure, employee access to MNPI, and compliance philosophy.

6. Sector Trends in Margin Accounts and Pledging of Securities

Many insider trading policies restrict or prohibit the use of company securities as collateral in margin accounts or pledging arrangements. These restrictions are generally intended to reduce the risk of involuntary sales occurring at a time when an insider possesses MNPI.

Our review found significant variation across industries and market capitalizations, making it difficult to identify a clear market standard. While some sectors showed a strong preference for outright prohibitions, others were more likely to permit pledging or margin arrangements subject to advance approval or other exceptions.

The data below highlights these differences across sectors and market capitalizations.

The data suggests that approaches to margin accounts and pledging arrangements remain highly company-specific. In many cases, companies appear to balance insider trading and reputational concerns against the personal liquidity and financing needs of directors, officers, and other employees.

7. Sector Trends in Applicability of Insider Trading Policies to Consultants

Companies vary considerably in the extent to which consultants are automatically subject to insider trading policies. This issue can be particularly important for companies that rely heavily on outside advisors, contractors, and subject-matter experts who may receive access to MNPI.

Pre-revenue life sciences and pharmaceutical companies were among the most likely to automatically apply insider trading policies to consultants (56% each), reflecting their greater reliance on third-party consultants and specialized advisors. A majority of technology companies also automatically covered consultants, as did 60% of large-cap financial services companies.

The data below highlights these differences across sectors and market capitalizations.

The data suggests that consultant coverage is often influenced by a company’s operating model and the extent to which non-employees routinely receive access to MNPI. Companies that rely extensively on consultants may be more likely to apply insider trading restrictions automatically, while others prefer to extend coverage only when consultants are specifically notified.

Conclusion

Two years into the SEC’s insider trading policy disclosure regime, meaningful trends are beginning to emerge across industries and market capitalizations. While broad consensus exists in certain areas, including gift preclearance requirements, restrictions on trading while in possession of MNPI, and the continued voluntary use of Rule 10b5-1 trading plans, significant variation remains with respect to shadow trading, quarterly trading restrictions, consultant coverage, and restrictions on pledging and margin arrangements. These disclosures provide a useful benchmark for companies evaluating whether their insider trading policies remain aligned with evolving market practice and company-specific risk considerations.