Lesson 2.2 Rule 144

An SEC (security act of 1933) rule that sets the requirements for selling or purchasing restricted, unregistered or controlled securities

Rule 144

An SEC (security act of 1933) rule that sets the requirements for selling or purchasing restricted, unregistered or controlled securities

Control person

• a director, officer, or affiliate of an issuer.

• a stockholder that owns 10% of any class of a corporation’s outstanding voting securities

• have the power to affect the direction of the management and policies of a company.

Insiders

Any person who has access to material non-public information about a corporation.

Restricted securities

acquired by investors through some means other than a registered public offering.

Registered public offering

Is an offer and sale of securities that has been registered under the Securities Act.

Private placement

an offering of new issue securities under regulation D that is not available to the public as a whole but rather select investors.

Restricted securities may not be sold by investors until they have been held (fully paid) for

6 monts

hen issued, these shares will have wording (called a restrictive legend) on the certificate warning about the holding period restriction.

restricted securities

Before these shares may be sold by an investor, the issuer must remove the restriction

restricted stocks/securities

What form should a control person complete to sell shares

Form 144

what is the 144 form used for

to determine the number of shares the control person may sell over a 90-day period.

The volume limitations on the number of shares that can be sold under Rule 144 are the greater of

• 1% of the outstanding shares of the company or

• the average weekly trading volume over the most recent four weeks

144 rule when selling shares

• Start by determining that 1% of the outstanding shares of the company

• he next step is to find the simple mean (average) of the most recent four weeks

• The volume limit is the higher of these two numbers

Rule 144 covers all of the following transactions except

answer:
non-affiliate trades on an exchange.

Cover:

trades of a newly issued nonregistered security.

trades by an affiliate on an exchange.

trades on an affiliate in the over-the-counter market.