Section 16 Flashcards
Which Handbook / Model Form Relate to: Forfeitures? What are the two example forfeitures?
Model Form 127: Forfeiture of Restricted Stock.
Example 1 - Shares granted to an officer, provided that they would vest is the registrant’s closing price of its common stock reached $X by X date, which did not occur, then the stock award expired.
Example 2 - Shares granted to an officer, provided that the award would vest in three equal installments, beginning on X date, provided the officer was employed on such date.
Which Handbook / Model Form Relates to: Cashless Exercise of Options & Immediate Sale?
Model Form 114: Broker-Assisted Cashless Exercise (Exercise and Immediate Sale Through Broker).
Example 1 - Director/Officer “cashless exercise” of options and immediate sale pursuant to 10b5-1 plan (e.g. Frequency - D. Lucchino - December 2020).
Which Handbook / Model Form Relates to: Regular Way Purchase or Sale of Securities?
Model Form 64: Open Market Purchase or Sale
Transaction Code:
“S” (“Open market or private sale of nonderivative or derivative security”) applies to sales in Column 3 of Table I.
“P” (“Open market or private purchase of non-derivative or derivative security”) applies to purchases in Column 3 of Table I.
Open market transactions effected on the same day at different prices may be aggregated on a single line, if the transactions occur within a $1.00 price range and certain other conditions are satisfied. For a discussion of aggregate reporting of open market transactions, see Model Form 65.
Which Handbook / Model Form Relates to: Multiple Sales at Differing Prices?
Model Form 59: Aggregate Reporting of Same-Day Open Market Purchases or Sales
See Reporting Principals (8) and (10) regarding aggregating sales within one-dollar price range.
Example 1 - Lemonade/Katie M. Client (August 2020)
Example 2 - Frequency (December 2020)
How to Calculate Weighted Average Price?
(1) Columns with volume/quantity and price for each transaction (shown to 4th decimal), (2) multiple volume*price for each row to provide the overall value, (3) find sum of quantity column (X) and sum of the value column (Y), (4) divide value sum by quantity (Y/X=Z) and bring/round to the nearest 4th decimal place (for Jenna/Dennis) or 2nd (for Ellen).
Example 1 - TCS, John Gehre 12/10/20 spreadsheet on iManage under 44 Act Work 0006 C/M.
Are employee purchases under Employee Stock Purchase Plan reportable on Form 4?
See Model Forms 144 and 145. Reporting principal (6) in Model form 144 re: reflecting in column 5 of future insider reports - it is advisable but not required to include a footnote explaining the reason for change in holdings.
No, these are not reportable. They can be reported early on a voluntary basis, though one risk is that this may put pressure on the company to take the approach on a going-forward basis. Although, Will Hackett has advised that they could say: “we did it once and then realized it is strange so we are not doing it again,” but he felt the best course would just be to not report it in the first place.
Example - Precision - Section 16 -Misc. - Acquisition under ESPP and Voluntary ESPP Disclosure.
