The Securities and Exchange Commission has a number of rules and regulations that businesses, investors, and others must follow. One such rule is called Rule 144. This rule has been designed to set certain conditions that regulate which unregistered, restricted, or control securities can be sold. By learning more about the conditions that must be met, you will be able to understand what this rule controls on the market.
The Conditions That Must Be Met for Unregistered, Restricted, and Controlled Securities to Be Sold.
The SEC has written certain conditions that must be met in order for those securities that are unregistered, restricted, or controlled. Here are these rules:
- The holding period for the security or securities must be met.
- There must be enough current information available to the general public about the security’s historical performance. This must be considered ‘adequate’ information based on information from the SEC.
- The amount of the security that is to be sold must be less than 1 percent of the shares outstanding, and must account for less than a person for the average of the last four weeks of trading volume.
- All of the typical trading conditions that would apply to a typical trade must be met.
- If a person wants to sell an excess of 500 shares, or an amount that is worth more than $10,000, the seller must notify the SEC with a filing before the sale takes place.
Further Breaking Down Rule 144
Brokers are legally able to sell the securities that are covered under this rule, but they must do so on an ‘agency’ basis. In other words, they can sell them, but they cannot solicit them as they might do with other securities. Also, if a seller has no association with the company that has issued the shares, and they have owned these securities for more than two years, they do not need to meet these conditions, and they can sell them as they would any other security. For more information about Rule 144 please visit Colonial Stock Transfer Company, Inc.
