Introduction
US insider trading compliance is not one obligation. It is a stack of them, and a program holds up only when every layer is in place and connected to the one above it. The four layers are the law that defines the wrong, the policy that translates the law into rules people can follow, the controls that enforce those rules day to day, and the evidence that proves the controls actually operated. Miss the top layer and you have no rules. Miss the bottom one and you cannot show the rules worked. This guide walks the whole stack, and points to the deeper pieces in this library where each layer earns a fuller treatment.
The legal foundation
Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 hold the prohibition, which makes it unlawful to trade on the basis of material non-public information (MNPI) in breach of a duty. US law reaches that conduct through two doctrines. The classical theory covers corporate insiders, the directors, officers and employees, who trade in their own company's securities while holding MNPI. The misappropriation theory, confirmed by the Supreme Court in United States v. O'Hagan (1997), covers someone who trades on confidential information in breach of a duty owed to the source of that information, even when they are not an insider of the company whose stock they trade. Tipping liability runs alongside both. Under Dirks v. SEC (1983) and Salman v. United States (2016), a tipper who discloses MNPI for a personal benefit, and a tippee who trades knowing that, can both be liable.
Two features of the law matter for how you build a program. First, materiality is a standard, not a bright line. Information is material if a reasonable investor would consider it important, which leaves a grey zone your policy has to help people navigate. Second, the perimeter is still moving. Shadow trading, trading in a peer company's securities on MNPI about your own employer, is the theory at the center of SEC v. Panuwat. A jury found for the SEC in April 2024 and the district court denied post-trial motions in September 2024. Panuwat appealed, the Ninth Circuit heard oral argument on 11 June 2026, and as of 18 July 2026 no decision has issued. The appeal should be treated as pending. Shadow trading is not settled nationwide law, and your policy's response to it is a company choice, not a mandate the case imposes.
Layered on top of the anti-fraud rules are the reporting and disclosure regimes. They are Section 16 (ownership reporting and short-swing liability for directors, officers and 10% holders), Regulation FD (which governs selective disclosure by domestic issuers, with foreign private issuers outside its scope), and the Item 408 disclosure obligations that made your insider trading policy a public exhibit. Each is law you comply with, not policy you design.
The policy
A policy is where the law becomes operational. A defensible US insider trading policy defines who is covered, prohibits trading on MNPI, addresses tipping, sets blackout periods and trading windows, imposes pre-clearance where needed, and takes a position, decided with your counsel, on trading in the linked securities of other companies. Item 408(b) of Regulation S-K now requires a domestic issuer to disclose whether it has adopted such a policy and to file it as an exhibit, so the document is no longer internal. The version you file, the version in force, and the version your people acknowledged must be the same version. Keeping those three in step is the single discipline most likely to fail quietly, and it is treated in full in Building an insider trading policy that holds up.
Two population points are worth stating separately, because conflating them is a common error. The people your policy covers are usually a broader group than your Section 16 reporting persons. The policy governs conduct. Section 16 governs reporting. Keep both rosters, and keep the distinction visible.
The controls
A policy that nobody enforces is a liability dressed as a control. Four operating controls turn the policy into practice, and each has its own deep-dive in this library.
Blackout periods and trading windows close trading around earnings and event-driven risk. The control works when the calendar targets the right audiences, opens and closes on schedule, and enforces at the point of clearance rather than by reminder email. See Blackout and trading-window calendars.
Pre-clearance decides, before a covered person trades, whether they may. That is the only moment a problem trade can still be stopped. A workflow people actually use is fast enough that they do not route around it and rigorous enough that its decisions mean something, with a contemporaneous MNPI certification captured at the moment of the request. See Designing pre-clearance workflows. One boundary belongs in the policy and the record alike. Clearance enforces your process. It does not certify that a trade is lawful.
MNPI handling and information barriers control who has access to material information while a matter is live, and restrict the people who do. The unit of work is the matter, a transaction, a results period, a material development, with a timestamped access chronology and acknowledgments. See MNPI handling, who's inside, when, and proving it and, for the broader deal-lifecycle view, the MNPI and information-barrier guide.
Rule 10b5-1 plans give directors, officers and other insiders an affirmative defense for trades made under a plan adopted before they held MNPI, but only if the plan satisfies the conditions the 2022 amendments added, including cooling-off periods and in-plan representations. See The Rule 10b5-1 program guide and 10b5-1 plan administration for legal teams.
The reporting layer
Section 16 is the reporting spine of an insider program. Directors, designated officers and beneficial owners of more than 10% of a registered equity class must report their holdings on Form 3, changes on Form 4 before the end of the second business day after the transaction, and an annual Form 5 sweep. Section 16(b) adds a strict-liability trap. Any profit from a purchase and sale, or sale and purchase, within six months is recoverable regardless of intent or knowledge. Filing runs through EDGAR Next, which since 15 September 2025 has required enrolled filers, Login.gov credentials, multi-factor authentication and managed permissions. The mechanics are set out in Section 16 mechanics for Forms 3, 4 and 5, and onboarding a new reporting person in Section 16 onboarding for new officers and directors.
Regulation FD governs the other half of disclosure discipline for domestic issuers. Material information goes to the market broadly, not selectively to favored analysts or investors, and a contemporaneous log of what was said and when is what turns a Reg FD position from an argument into a record. See Reg FD disclosure logs, a practice guide. FPIs are outside Reg FD's scope. Many keep the disclosure habit anyway.
Foreign private issuers
An FPI does not sit inside the domestic-issuer regime by default. Section 16 has historically not applied to FPI insiders by virtue of Rule 3a12-3, and Reg FD does not bind FPIs. The HFIA Act changed part of this picture, with a final rule and conditional exemptive orders that carve out specified jurisdictions, but it does not follow that every FPI insider must now file. The applicability, and the current exemptions, are set out in The HFIA Act, applicability and current exemptions. If you are an FPI, start from what applies to you specifically rather than assuming either the full domestic regime or a blanket exemption.
The evidence layer
Everything above produces a defensible position only if it leaves a record. Every insider trading inquiry converges on the same question, who had access to what, and when, and that question is brutal to answer by reconstruction. The evidence layer is the covered-person roster with effective dates, the acknowledgments tied to policy versions, the pre-clearance decisions with their reasons, the MNPI access chronologies, the 10b5-1 representations bound to the adopting event, and the Section 16 filings reconciled against what was sent. The program you can produce is the program you have. The one you have to reconstruct is a gap. Build the record as the information travels, not after a subpoena arrives.
Where the program stops
A compliance program does not decide the legal question. Pre-clearance does not certify legality. A 10b5-1 plan does not immunize a trade made in bad faith. An information barrier does not make trading on MNPI lawful. These controls enforce process and preserve evidence, and the legal determinations stay with your counsel. Draw those boundaries in the policy and in the record, because a control described as more than it is becomes a liability the day it is tested.
InsiderList holds the layers of an insider program in one system. A roster of covered and reporting persons with effective dates, policy distribution paired with acknowledgments, pre-clearance with contemporaneous MNPI certifications, MNPI matters with access chronologies and linked restrictions, a 10b5-1 register, and deadline-tracked Section 16 preparation that hands filing-ready data to your filing provider and reconciles the filed return. Your provider files. Your counsel reviews. It applies the rules your policy defines and keeps the evidence that proves they operated.
See the whole insider program held on one record rather than across a dozen spreadsheets. Book a demo with our team.
InsiderList is insider trading compliance software used by companies in the UK, Europe, the USA and the UAE. This article is for general information and does not constitute legal advice. For advice on your situation, consult qualified US securities counsel.
