Most Insider Trading Is Pay
„Insiders sold billions this quarter“ is a true sentence that explains nothing. Most of what gets counted as insider trading is a payroll mechanism.
Executives at listed companies are paid in stock. Every step of that process generates an SEC filing: the grant, the option exercise, the shares surrendered for tax, and eventually the sale. Four filings, one salary.
Someone spending their own money on the open market also files — the same form, a different code. Counting both in one total is how a pay cycle gets reported as a mass exit.
Where the filings actually come from
Sort a quarter of filings by transaction code and the shape is always the same: sales dominate, and behind them sit the grants and exercises that produced the shares in the first place. Purchases are the smallest of the five common codes — and the only one that is a decision.
The exact counts for the current window are on the overview, and they move every day. The proportion does not move much at all.
Why the asymmetry is the whole point
There is no compensation plan that requires an executive to buy shares with their own money. Nobody is granted a purchase.
Sales, meanwhile, have at least six ordinary explanations: covering the tax on a grant, a pre-arranged schedule, diversifying a concentrated position, a house, a divorce, or raising the cash for a charitable pledge. Any one of them produces the same row in the same filing.
So a purchase carries information that a sale of the same size does not. Not because buying is virtuous, but because it has fewer possible causes.
Why a dollar ranking says almost nothing
Count and dollar total do not tell the same story, and they do not even keep the same order. By number, sales dominate. In money, two opposite forces pull at the gap: one large purchase can outweigh thousands of routine sales, and one vesting event at a large employer can outweigh a mid-cap firm's entire year of deliberate buying. Which force wins changes from quarter to quarter — the overview states the current ratio in both units, counted and measured.
This is why a ranking by dollar value puts the same handful of large employers on top every quarter, and why it says almost nothing. A ranking by purchases finds different companies entirely — usually smaller ones, where a director writing a personal cheque is a real event.
Who actually buys
Not, for the most part, chief executives. The two groups that buy most often are directors and 10 % owners — board members topping up, and large shareholders adding to a stake.
That fits the mechanics. A CEO already holds a concentrated position and is usually reducing it; a non-executive director holds comparatively little and buys to build one.
It also means the phrase „the CEO is buying“ describes something genuinely unusual — which is exactly why it is worth separating out rather than averaging away.
Two patterns worth noticing
One person, many purchases. A single filer buying repeatedly over weeks is usually a large shareholder building a position, and the total can run into the billions. Those are separate decisions on separate days — what gets reported many times is each single day's trade, split across several executions.
Many people, one company. The rarer and more interesting shape: a dozen or more separate individuals at the same company buying independently within a quarter. No grant schedule produces that.
Neither pattern is a recommendation. Both are the kind of thing a count of „insider activity“ hides completely.
How to read a headline about insider selling
Ask which code. If the figure includes A, M and F rows, it is measuring compensation.
Ask how many people. A thousand filings from twelve individuals is a vesting calendar; forty filings from thirty individuals is something else.
Ask what the same window shows for purchases. That number is always smaller and always more informative.
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