What is the meaning of:
“Blackout Period ”?
In its most general sense, a “blackout period” is a period of time during which certain people are either prohibited, or limited, from engaging in a certain activity.
In the employment context, the term “blackout period” is most commonly used in two ways:
First, employers who maintain investment or retirement plans for their employees sometimes impose “blackout periods” during which employees are prohibited from making certain changes to their investments. This is generally intended to prevent employees who know about the planned changes from taking advantage of their knowledge of the proposed changes, to the possible detriment of other employees, who are unaware.
Second, corporate executives and certain employees who may be privy to “inside information” are prohibited by the imposition of a “blackout period” from buying or selling the company’s stock. This is intended to deter what is called “insider trading,” which is unfair to all other shareholders who do not possess the “inside information.”
What “inside information” would justify the imposition of a “blackout period?” Examples include (i) knowing that an announcement is going to be made that the company is being purchased, or is merging, which might make the stock price go up, and (ii) knowing that the company will soon announce that its computers have been hacked, and its secrets have in this way been divulged to hackers, which might make the stock price decline.
Some companies impose regular “blackout periods,” such as fifteen days before each fiscal quarter or fiscal year earnings reports are publicly announced.
“Blackout periods” are imposed by companies to deter improper activities, but may be enforced by governmental agencies, including the U.S. Securities Exchange Commission.
If your employer imposes a “black out” period on any of your activities, chances are very high that you will be notified. Engaging in prohibited activities during a company-announced “blackout period” is almost always considered grave misconduct and therefore “cause” for firing.
Get the picture? Keep it in mind. You read about it here. Knowledge is power. Forewarned is forearmed. That’s what SkloverWorkingWisdom™ is all about.
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