Shares surrendered automatically by an insider to cover tax liabilities.
Definition
When restricted stock units (RSUs) vest, the shares become taxable income. To cover these taxes, companies automatically withhold or sell a portion of the newly vested shares on behalf of the insider. The SEC requires this to be reported on Form 4 with the transaction code 'F'.
Why it matters for Whale Tracking
Unsophisticated algorithms often misinterpret Code F as a bearish insider sale, creating false alarms. Quantitative models must aggressively filter out tax withholdings because they are mandatory, automated corporate actions, not a reflection of the executive's sentiment.
Real-World Example
"An executive is granted 10,000 shares. On vest day, 3,500 shares are automatically returned to the company to pay the IRS. The Form 4 will show a 'disposition' of 3,500 shares, but this is a purely administrative event."