Insider Trading Blackout Period Policy: 2026 Compliance Walkthrough

If you are drafting or updating your company's insider trading blackout period policy right now, the rules changed materially in 2023 and the compliance stakes are higher than most teams realise. The SEC's Item 408 of Regulation S-K now requires public companies to file their full insider trading policy as Exhibit 19 to their Form 10-K, making every structural choice you make publicly benchmarkable on EDGAR. This guide walks through the concrete decisions compliance officers and general counsel need to make, backed by survey data from 50 filed policies and the SEC's own rulemaking.

Key takeaway: A boilerplate policy is no longer sufficient. The SEC can now compare your stated policy against trading records in EDGAR, and enforcement cases show it will.

What Is an Insider Trading Blackout Period Policy?

An insider trading blackout period policy is a formal, written restriction that prohibits designated insiders from trading company securities during defined sensitive windows. It sits inside the broader insider trading policy and typically covers two types of blackout: quarterly blackout periods tied to the financial close and earnings cycle, and event-specific (or "special") blackout periods imposed ad hoc when the company is aware of a significant undisclosed development.

The policy applies to "covered persons" -- typically directors, Section 16 officers, and employees with regular access to material nonpublic information (MNPI). It is not a voluntary best practice. The SEC's December 2022 final rule (effective February 27, 2023) requires public companies to disclose under Item 408(b) of Regulation S-K whether they have adopted such a policy, and if so, to file it in full. Companies that say "no" must explain why not.

For a deeper look at what Section 16 officers must separately report on their trades, see Finrep's Section 16 insider reporting compliance guide.

SEC Exhibit 19 Filing Requirement: What You Must Disclose

Every public company with a fiscal year ending on or after June 30, 2023 must now file its insider trading policy as Exhibit 19 to its Form 10-K (or Exhibit 11 to Form 20-F for foreign private issuers). Calendar year-end companies were required to comply beginning with annual reports filed in early 2025.

This is a structural shift, not a paperwork exercise. Before this rule, insider trading policies were internal documents. Now they sit on EDGAR, searchable by investors, proxy advisors, plaintiff attorneys, and the SEC's own enforcement staff. The SEC can directly compare your stated blackout period start and end dates against the trading records it already holds.

Item 408(b) requires disclosure of:

• Whether the company has adopted insider trading policies and procedures governing trading by directors, officers, and the company itself.
• If not, an explanation of why not.
• The full policy text as an exhibit.

Item 408 also requires quarterly disclosure in Forms 10-Q and 10-K of any adoption or termination of Rule 10b5-1 trading arrangements and non-Rule 10b5-1 arrangements by directors and Section 16 officers -- creating an ongoing administrative obligation that your compliance calendar must absorb.

Practical note: If your policy references a separate 10b5-1 plan policy, check whether that document also needs to be filed. Orrick's analysis of early filers found that some companies filed the insider trading policy but left the 10b5-1 plan provisions in an unfiled companion document -- a gap the SEC may scrutinise.

How to Set Quarterly Blackout Period Start and End Dates

The start date should reflect when insiders could first have knowledge of quarterly results -- which depends on your financial close process, not a fixed calendar rule.

A White & Case survey of 50 publicly filed policies (25 Fortune 100 and 25 mid-cap companies) found the following distribution:

As White & Case puts it: "The start date of a quarterly blackout period should be determined in part by when insiders might first have knowledge of the company's quarterly results, which can in turn depend upon a company's particular data accumulation and financial close processes."

Companies with complex consolidations or slower close timelines should start earlier. A company that completes its close in five days can reasonably start its blackout two weeks before quarter end. One that takes three weeks to consolidate subsidiaries may need to start four to six weeks out.

For the end date, the same survey found:

The end date is not arbitrary. It must align with when your policy considers MNPI to be "public" -- meaning broadly disseminated and absorbed by the market. White & Case confirmed that in every policy addressing both points, the end of the quarterly blackout matches the company's general MNPI-is-public standard. Of the 50 companies surveyed, 44% require one trading day after broad dissemination and 42% require two trading days.

Copart's approach -- filed as Exhibit 19.1 in May 2023 -- starts the blackout at the end of the 15th day of the third month of each fiscal quarter and ends it at the start of the second full trading day after public release of results. That structure sits squarely in the market consensus.

Non-Calendar Fiscal Year Companies

Companies with fiscal years ending other than December 31 faced earlier compliance deadlines (June 30, 2023 fiscal year-end companies were first required to comply) and often face different timing pressures. If your fiscal quarter ends in January, February, or March, your blackout window may overlap with holiday periods or compressed close timelines. Build that into the policy's start-date language rather than relying on a fixed number of days.

Who Must Be Covered: Designating "Covered Persons"

Most companies do not subject all employees to quarterly blackout restrictions. The White & Case survey found that 86% of companies limit quarterly blackout coverage to directors, Section 16 officers/executive officers, and other designated employees with access to quarterly financial information. Only 14% extend quarterly blackouts to all employees.

The NASPP/Deloitte 2025 Tax Equity Administration Survey adds granularity: named executive officers are subject to quarterly blackouts at 90% of companies, employees with access to financial or MNPI at 89%, and other senior management at 73%. Middle management drops to 35%, and the general workforce to 25%.

The practical decision framework:

1. Always include: Directors, Section 16 officers, CFO's direct reports, financial close team members, and anyone in the consolidation or reporting chain.
2. Consider including: Business unit presidents, legal department staff, M&A team members, and IR personnel.
3. Review periodically: As the company grows or reorganises, the designated-persons list needs updating. Orrick notes that companies should review which individuals are subject to blackout periods and preclearance as the organisation changes.
4. Document the designation: Maintain a current list of covered persons. The compliance officer should update it at least annually and on any significant organisational change.

Preclearance requirements largely mirror blackout coverage. 98% of the 50 companies surveyed (49 of 50) require covered persons to obtain pre-approval from the policy administrator before trading. This is the operational backbone of the policy -- the blackout period tells people when they cannot trade; preclearance tells them how to get permission when the window is open.

Event-Specific Blackout Periods: Triggering and Communicating Them

Event-specific blackout periods are imposed by the compliance officer when the company becomes aware of a significant undisclosed development. Common triggers include a pending merger or acquisition, major undisclosed litigation, a significant contract, or an unexpected earnings restatement.

Best practice for structuring this provision:

• Trigger authority: Vest the power to impose an event-specific blackout in the compliance officer (or general counsel), without requiring board approval for each instance. Speed matters -- a merger announcement can leak within hours.
• Communication: Notify affected individuals directly and confidentially. The notification itself should not describe the underlying event, only that a blackout is in effect and trading is prohibited until further notice.
• Scope: Specify that the blackout applies to all transactions in company securities, including derivative transactions, until the information is made public.
• Lifting the blackout: The compliance officer should affirmatively notify covered persons when the event-specific blackout ends, using the same MNPI-is-public standard as the quarterly blackout.

As FFS Law Firm notes: "The company may impose additional blackout periods during significant non-public events. No trading is permitted until the information is made public."

How Blackout Periods Interact with Rule 10b5-1 Trading Plans

A Rule 10b5-1 trading plan adopted during a blackout period cannot qualify for the affirmative defense against insider trading liability. This is the most common structural mistake compliance teams make when updating policies post-2023.

The SEC's December 2022 final rule significantly tightened the Rule 10b5-1 affirmative defense conditions:

The interaction with blackout periods is direct. An officer who wants to establish a 10b5-1 plan must do so during an open trading window, when they are not in possession of MNPI. The 120-day cooling-off period then runs from that adoption date. If the next open window opens one week before quarter end and closes two days after earnings, the practical planning horizon is tight.

For compliance teams: build a calendar that maps open windows against the 120-day cooling-off period for each director and Section 16 officer. Plans should typically be adopted in the first open window after earnings release, giving the maximum runway before the next blackout.

The Terren Peizer case is the cautionary benchmark. Peizer (CEO of Ontrak Inc.) sold over $20 million of stock while in possession of MNPI using improperly structured 10b5-1 plans and was convicted of insider trading. The plans did not provide immunity because they were not established in good faith. For the full Rule 10b5-1 compliance framework, see Finrep's Rule 10b5-1 trading plan requirements guide.

Post-Termination Trading Restrictions: The Gap Most Policies Miss

If an insider possesses MNPI at the time of termination, they remain prohibited from trading until that information becomes public or immaterial. If the termination occurs during a blackout period, the former insider must wait until the blackout period ends.

This provision is absent or vague in a large number of policies, yet it is one of the most common compliance gaps -- particularly for companies experiencing executive turnover. The risk is real: a departing CFO who knows about an unannounced restatement and sells shares on the way out faces the same liability as a current employee.

Draft the post-termination provision to:

• Apply to all covered persons, not just Section 16 officers.
• Specify that the obligation survives termination for as long as the MNPI remains nonpublic.
• Address the blackout-period overlap explicitly: if termination falls during a quarterly or event-specific blackout, trading is prohibited until the blackout lifts.
• Require the departing insider to confirm in writing (as part of offboarding) that they are aware of and bound by this obligation.

What Is Not Allowed During a Blackout Period: Prohibited Transactions

During a blackout period, covered persons cannot execute any open-market purchase or sale of company securities. But the scope of prohibited transactions goes further than most people assume.

Prohibited transactions typically include:

• Open-market purchases and sales.
• Exercises of stock options followed by same-day sale ("cashless exercises").
• Gifts of company securities (most policies now address this explicitly, per Orrick's analysis).
• Purchases or sales of derivative securities referencing company stock.
• Hedging transactions, including prepaid variable forwards, equity swaps, and collars.
• Pledging company securities as collateral (prohibited at 98% of companies surveyed).

Permitted exceptions (which must be explicitly carved out in the policy):

• ESPP purchases: Automatic enrollment and contribution-rate changes are permitted at just under 70% of companies (NASPP survey), because the purchase decision was made before the blackout.
• RSU/restricted stock vesting and tax withholding: Share withholding to cover tax on vesting is permitted at 65% of companies. The vesting itself is not a discretionary trade.
• Cash option exercises: Permitted at 50% of companies, where no open-market sale is involved.
• 10b5-1 plan trades already in place: Trades executing under a properly adopted, pre-existing 10b5-1 plan are generally permitted during blackouts -- but only if the plan was adopted outside a blackout period and meets all the post-2023 conditions.
• 401(k) plan transactions: Permitted at 40% of companies for routine contributions and fund switches not involving company stock.

The policy must spell out each exception explicitly. A vague carve-out for "automatic transactions" creates ambiguity that neither the compliance officer nor the insider can resolve confidently.

Two Blackout Regimes You Must Not Confuse

Compliance officers frequently conflate two legally distinct blackout obligations. They are separate, and each requires its own policy treatment.

The ERISA Section 306 blackout is triggered by plan administrator actions (a 401(k) plan transition, for example) and carries its own statutory notice requirements. It does not replace or subsume the securities law blackout -- both can apply simultaneously.

Policy Design Checklist for Compliance Officers

Use this checklist when drafting a new policy or reviewing an existing one against the 2026 standard:

Structure and scope

• Policy covers both quarterly and event-specific blackout periods.
• "Covered persons" list is defined and documented, with a process for periodic updates.
• Policy extends to family members and controlled entities of covered persons.
• Post-termination trading restrictions are explicit and survive departure.

Quarterly blackout mechanics

• Start date is calibrated to the financial close process, not just a fixed number of days.
• End date aligns with the company's MNPI-is-public standard (1 or 2 trading days after earnings release).
• Non-calendar fiscal year timing is addressed if applicable.

Event-specific blackout procedures

• Compliance officer has authority to impose event-specific blackouts without board approval.
• Notification procedure is documented and does not require disclosing the underlying event.
• Lifting procedure is equally explicit.

Exceptions and permitted transactions

• ESPP, RSU vesting/withholding, cash option exercises, and 10b5-1 plan trades are addressed explicitly.
• Gifts are covered in both the MNPI prohibition and the preclearance requirement.
• Hedging and pledging prohibitions are stated with no ambiguity.

Rule 10b5-1 interaction

• Policy states that plans must be adopted outside blackout periods.
• 120-day cooling-off period for officers/directors is reflected in the compliance calendar.
• Single-plan and no-overlapping-plans rules are referenced.

SEC filing compliance

• Policy is filed as Exhibit 19 to Form 10-K (or Exhibit 11 to Form 20-F).
• Item 408(b) disclosure is included in the annual report.
• Quarterly 10b5-1 plan adoption/termination disclosures are on the compliance calendar.

Administration

• Preclearance process is documented with a named administrator.
• Records of preclearance requests and approvals are maintained.
• Policy is reviewed and approved by the board (or audit committee) at least annually.

The Enforcement Reality: What Happens If You Trade During a Blackout

Trading during a blackout period is not just a policy violation -- it is potential evidence of insider trading under Rule 10b-5, carrying criminal penalties of up to 20 years imprisonment and civil fines of up to three times profits gained.

Recent cases make the consequences concrete:

• Andras Sebok (Wizz Air): The UK FCA fined Sebok £123,500 for 115 trades worth over £4 million during restricted periods before earnings announcements. The volume and pattern of trades made the violation impossible to miss.
• Terren Peizer (Ontrak Inc.): Convicted of insider trading after selling over $20 million of stock while in possession of MNPI using improperly structured 10b5-1 plans. The plans failed because they were not established in good faith.
• James Herbert II (First Republic Bank): Sold $6.8 million of stock before the bank's collapse, triggering regulatory scrutiny of both the executive and Morgan Stanley for failing to monitor insider trades. This case highlights that the compliance officer and the broker share responsibility for monitoring adherence.

The Exhibit 19 filing requirement adds a new enforcement dimension. The SEC now holds your stated policy and your EDGAR trading records in the same database. A gap between the two -- a trade that falls inside the blackout window your own Exhibit 19 defines -- is a documented inconsistency the SEC's enforcement staff can identify algorithmically.

For the Form 4 reporting obligations that accompany these trades, see Finrep's guide on what transactions trigger a Form 4 filing under Section 16.

Benchmarking Your Policy Against EDGAR Filings

One underused capability the Exhibit 19 requirement created: you can now search EDGAR for peer companies' filed insider trading policies and benchmark your own. Use the EDGAR full-text search to pull Exhibit 19 filings from direct competitors or companies of similar size and complexity.

Look specifically at: blackout start and end dates, covered-persons definitions, exception carve-outs, and how they handle post-termination obligations. Proxy advisors and institutional investors are doing exactly this analysis. Your policy should be able to withstand that comparison.

FAQ

Can you trade during a blackout period? No. Covered persons are prohibited from executing any open-market purchase or sale of company securities during a blackout period. Certain automatic transactions -- ESPP purchases, RSU tax withholding, and trades under a properly adopted 10b5-1 plan -- may be permitted if the policy explicitly carves them out.

How long is the blackout period before earnings? Market practice is approximately two weeks before quarter end (52% of companies), with the blackout lifting one or two full trading days after earnings are released (94% of companies combined). The precise window should reflect your financial close timeline, not a fixed rule.

What happens if I accidentally sell shares during a blackout period? The trade is a potential violation of both the insider trading policy and federal securities law. The company should be notified immediately. Depending on whether MNPI was held at the time, the SEC may treat it as evidence of insider trading. Penalties under Rule 10b-5 include disgorgement of profits, civil fines up to three times profits gained, and criminal imprisonment up to 20 years. Accidental trades do not automatically create liability, but the burden falls on the insider to demonstrate they did not possess MNPI.

Do blackout periods apply to hedging and pledging? Yes. 98% of companies surveyed prohibit hedging and pledging in some form, and the prohibition typically applies at all times -- not just during blackout periods. Hedging instruments (prepaid variable forwards, equity swaps, collars) are prohibited because they allow an insider to lock in a sale price without executing an open-market transaction, defeating the purpose of the blackout.

Do blackout restrictions apply after I leave the company? Yes, if you possessed MNPI at the time of departure. The obligation to refrain from trading survives termination until the information becomes public or immaterial. If you left during a blackout period, you must wait until it ends.

Does our insider trading policy need to be filed with the SEC? Yes, for any public company with a fiscal year ending on or after June 30, 2023. The full policy must be filed as Exhibit 19 to Form 10-K under Item 408 of Regulation S-K. If you have not yet filed, check your most recent 10-K for compliance.