What Is a Blackout Period?

A blackout period is a policy or rule setting a time interval during which certain actions are limited or denied. It is most commonly used to prevent company insiders from trading stock based on insider knowledge.

Company retireme🍬nt plans also may have a blackout period during which investors in the plan cannot modify their plan options.

Understanding Blackout Periods

Blackout periods may be imposed in certain contracts, policies, or activities. For example, a media company may impose a blackout on all political advertising for the 24 hours before an election so that one candidate can't lob an accusation that cannot be fact-checked or refuted before the polls open.

However, the most common use of the blackout period limits financial tran𝄹sactions based on insider knowledge.

Blackouts in Retirement Plans

Occasional blackout periods are common in employee 澳洲幸运5开奖号码历史查询:retirement plans. Duri🥀ng the blackout period, employees who i🌠nvest in the company retirement or investment plan cannot make modifications to their plans, such as changing the allocation of their money, and may not be able to make withdrawals.

The length of time for a blackout is not limited by law. If the blackout is expected to last for more than three days, a notice of it must be given to the employees. However, the blackout period can last 💙for weeks or even months.

A blackout period may be imposed because a 澳洲幸运5开奖号码历史查询:plan is being restructured or altered. It gives the fund managers a chance to perform necessary maintenance on their funds, including accounting and periodic reviews. The blackout period prevents employee🐽s from making major changes to their investment options based on information that may soon be outdated. Directors and executive officers are also prevented from purchasing or selling their own company securities during the blackout.

The 澳洲幸运5开奖号码历史查询:Securities and Exchange Commission (SEC) makes the rules that protect employees during blackout periods.

Blackouts in Stock Transactions

The primary purpose of blackout periods in publicly traded companies is to prevent 澳洲幸运5开奖号码历史查询:insider trading. Some employees who work for publicly traded companies might be subject to blackout periods because 🌃they have access to insider information about the company.

The SEC prohibits employees, even top company officials, from trading based on company information that has not yet been made public. That’s why publicly traded companies might enforce blackout periods whenever insiders may have access to 澳洲幸运5开奖号码历史查询:material information about the company, such as iꦛts financi🌌al performance.

For example, a company may impose a blackout period each quarter for a certain number of days before the release of an 澳洲幸运5开奖号码历史查询:earnings report. Other events that can trigger a blackout period include 澳洲幸运5开奖号码历史查询:mergers and acquisitions (M&A), the imminent release of a new pro🦩duct, or even the release of an initial public offering (IPO). In each case, insider knowledge would give an unfair advantage to the employee.

Blackouts in the Financial Industry

Since 2003, analysts have been subject to a blackout period that prohibits them from publishing research reports on companies engaging in IPOs before they begin trading on the open market and for up to 40 days after. In this✤ case, the blackout rule is intended to prevent financial analysts from fulfilling any undisclosed marketing role in the IPO.

Blackout Period Example

If a company overseeing a 澳洲幸运5开奖号码历史查询:pension fund is shifting from one 澳洲幸运5开奖号码历史查询:fund manager to another at a different bank, the process would cause a blackout period. The blackout would give the firm time to make the transition from one fund manager to another🗹 while minimizing ဣthe impact on employees who depend on their retirement contributions.