Rule 144
Candlefocus EditorRule 144 is an SEC regulation issued under the Securities Act of 1933 that provides certain guidelines for the sale of restricted or unregistered securities. The rule was designed to ensure that transactions in such securities take place in an orderly and well-informed manner. It applies to transactions involving controlling or majority shareholders in particular, but can also affect other shareholders.
Under Rule 144, five conditions must be met for a sale of restricted or unregistered securities to be considered lawful. The first of these conditions is a minimum holding period, requiring an investor to hold their securities for at least six months before they can be resold. The second condition is quantity restrictions, which limit the number of shares an investor may sell in a three-month period to the greater of 1% of the outstanding shares of the issuer, or the average weekly trading volume of the issuer’s securities.
The third condition requires disclosure of any transaction involving restricted or unregistered securities in a Form 144 that must be filed with the SEC. The fourth condition requires the investor to sign a written representation that the securities are in compliance with all applicable federal securities laws. Finally, the fifth condition requires that investor to provide a current public information statement (PI statement), which is a disclosure document that contains the basic facts about the company in question.
Overall, Rule 144 is an important regulation for those wishing to buy or sell restricted or unregistered securities. It ensures that all transactions in these types of securities are conducted in a fair and open manner and provides investors with an important level of protection. Despite its restrictions, Rule 144 also provides investors with the opportunity to make informed decisions when investing in securities.