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Demystifying the Transaction Codes for Form 5 Tables 1 and 2

Understanding the intricacies of corporate financial documents can be a daunting task, especially when delving into the U.S. Securities and Exchange Commission's (SEC) Form 5. This document, which company insiders use to report their annual statements of beneficial ownership, is a treasure trove of information for investors, financial analysts, and legal professionals. This article, created as a potent tool for the financial resource website form345.com, is geared towards explaining the transaction codes linked to Tables 1 and 2 of Form 5.

Breaking Down the Codes: Form 5 Table 1, Column 3

Table 1, featured in SEC Form 5 and referred to as the "Statement of Ownership," serves as a platform for individuals to document the securities they beneficially own as the issuer's fiscal year concludes. 

Filers must complete this table with pertinent information, including specifying the title of every class of securities and quantifying the owned securities. Another key aspect involves determining the ownership type — direct (D) or indirect (I). If indirect, the filer must further clarify the nature of that ownership.

The completion of Table 1 embodies transparency and provides a comprehensive overview of the filer's ownership stake in the corporation at the close of the fiscal year.  

Here are the transaction codes for Table 1 of the Form 5:

  • P: Open market or private purchase of non-derivative or derivative security
  • S: Open market or private sale of non-derivative or derivative security
  • A: Grant, award, or other acquisition pursuant to Rule 16b-3(d)
  • D: Disposition to the issuer of issuer equity securities pursuant to Rule 16b-3(e)
  • F: Payment of exercise price or tax liability by delivering or withholding securities incident to the receipt, exercise or vesting of a security issued in accordance with Rule 16b-3
  • I: Discretionary transaction in accordance with Rule 16b-3(f) resulting in acquisition or disposition of issuer securities
  • M: Exercise or conversion of derivative security exempted pursuant to Rule 16b-3
  • C: Conversion of derivative security
  • E: Expiration of short derivative position
  • H: Expiration (or cancellation) of long derivative position with value received
  • O: Exercise of out-of-the-money derivative security
  • X: Exercise of in-the-money or at-the-money derivative security
  • G: Bona fide gift
  • L: Small acquisition under Rule 16a-6
  • W: Acquisition or disposition by will or the laws of descent and distribution
  • Z: Deposit into or withdrawal from voting trust
  • J: Other acquisition or disposition (describe transaction)
  • K: Transaction in equity swap or instrument with similar characteristics
  • U: Disposition pursuant to a tender of shares in a change of control transaction

This set also includes holdings or transactions on Forms 3, 4, or 5, which haven't been reported previously.

Deciphering the Codes: Form 5, Table 2, Column 4

In contrast, Table 2, titled "Statement of Changes in Beneficial Ownership," outlines transaction codes that provide details about each transaction's nature. 

Here's a snapshot of the relevant transaction codes for Table 2:

  • P: Open market or private purchase of security
  • S: Open market or private sale of security
  • A: Grant, award, or other acquisition under Rule 16b-3(d)
  • D: Disposition to the issuer of securities under Rule 16b-3(e)
  • F: Payment of exercise price or tax liability by delivering or withholding securities under Rule 16b-3
  • I: Discretionary transaction under Rule 16b-3(f) leading to acquisition or disposition of securities
  • M: Exercise or conversion of derivative security under Rule 16b-3
  • C: Conversion of derivative security
  • E: Expiration of short derivative position
  • H: Expiration (or cancellation) of long derivative position with value received
  • O: Exercise of out-of-the-money derivative security
  • X: Exercise of in-the-money or at-the-money derivative security
  • G: Bona fide gift
  • L: Small acquisition under Rule 16a-6
  • W: Acquisition or disposition by will or laws of descent and distribution
  • Z: Deposit into or withdrawal from voting trust
  • J: Other acquisition or disposition (requires description)
  • K: Transaction in equity swap or similar instrument
  • U: Disposition pursuant to a tender of shares in a change of control transaction

Bear in mind that codes F, M, and C often pertain to situations involving derivative securities and are exempted under Rule 16b-3.

Becoming familiar with these transaction codes for Form 5's Table 2 is crucial for unlocking the information communicated by company insiders. This understanding can provide vital insights for more informed investment decisions or financial analysis. Time to dive in and start decoding!

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