How could a senior executive of a company sell any of that company’s stock without it being insider trading?

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How could a senior executive of a company sell any of that company’s stock without it being insider trading?

In: Economics
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There are two primary ways:

1) They have transactions arranged to sell at pre-determined times well in advance, for example they want to sell $250k worth of shares on the last day of every quarter.

2) There are “blackout” periods where insiders are advised that they are not able to trade. These are typically at the end of a fiscal quarter when executives become aware of financial performance, or ad hoc when there is a material event being discussed like an acquisition. The company’s legal department will advise those “in the know” when they can/can’t sell because the executive meets the criteria of having “material, non-public” information about the company.

“insider trading” does not apply to any trade, it applies to trades based on “inside information” that the public does not have access to

so if Tim Cook wants to buy a yacht and needs to free up $100 million in cash by selling some Apple stock, he can do that. Generally key executives need to file with the SEC before making large trades to that they are public knowledge in advance

if Tim Cook knows that Apple is going to sink 10% because of a bad quarter, he CANNOT trade on that information before it is made public. And he can’t tell his brother to trade on that information either

There are blackout dates when company employees cannot sell, like weeks leading up to earnings release, when a merger or acquisition is in the works, when material info like a lawsuit settlement or regulatory ruling are known but not yet publicly announced.

Also, many senior execs set up automated trading orders, say selling 1000 shares on the Friday after earning release every quarter, which make it easier to show them at the trade wasn’t tied to any sort of inside knowledge.