As the name suggests, this is a period of time during which directors, executive officers, certain employees and some other people and related entities are prohibited from selling or buying a company’s securities. Sort of like blackout dates for airline points, only for stock. The goal is to prevent people with inside information like employees from trading their stock based on such information before it’s made public.
There is a normal blackout period is from two weeks before the end of each fiscal quarter to the second full day of trading after the quarterly earnings report is made public.
Blackouts can also be imposed in connection with important corporate changes, such as mergers and acquisitions. Blackouts last at least three days but not more than 60.
The SEC regulates blackout periods so that employees aren’t screwed over in the process. They won’t allow directors or executives who actually issued the equity to sell their securities either. So everyone is on the same page.
Lucky these blackout dates are in place or Chuck would be doing some major insider trading right now.