Series 14: 6.2.4. Resales Of Restricted And Control Securities: Rule 144

6.2.4. Resales of Restricted and Control Securities: Rule 144

Investors who buy securities in a private placement cannot turn around and immediately sell them to the general investing public. These securities are called restricted securities and reselling them requires an exemption to the general rule that unregistered securities cannot be sold on the secondary market. The three most commonly used exemptions are those provided by Rule 144, Rule 144A, and the FAST Act. Rule 144 also has some other provisions you may need to know for the exam, so we will cover it first.

Rule 144 allows purchasers of restricted securities to resell them after holding them for a certain amount of time. If the issuer is a company that files reports to the SEC, this mandatory holding period is six months. If the issuer is a non-reporting company, the holding period is 12 months. Once the holding period has ended, investors need to get the restricted legend removed from the securities in order to sell them. This ca