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Key Takeaways. Rule 144A modifies restrictions for the purchase and sale of privately placed securities among qualified institutional buyers without the need for SEC registrations. ing to the rule, sophisticated institutional investors dont require as much information and protection as individual investors.
Form 144 filings indicate insider selling and therefore can trigger a bearish reaction in the underlying stock.
Counsel delivering an opinion as part of a Rule 144 sale typically relies on, among other things, a representation letter from the seller to establish certain facts underlying the opinion, and the sellers broker and the issuers transfer agent may require a similar representation letter.
Rule 144 at (a)(1) defines an affiliate of an issuing company as a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer.
Form 144 is also known as the Notice of Proposed Sale of Securities. As the name suggests, the purpose of Form 144 is to notify the SEC about the desired sale of securities of stock, both common and preferred. Other securities, such as asset-backed securities, are also covered by this form.
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Rule 144 provides an exemption and permits the public resale of restricted or control securities if a number of conditions are met, including how long the securities are held, the way in which they are sold, and the amount that can be sold at any one time.
Holding period requirement For those considered a reporting company for at least 90 days, securities must be held for a minimum of six months. Those considered a non-reporting company for at least 90 days must be held for more than one year.
Form 144, required under Rule 144, is filed by a person who intends to sell either restricted securities or control securities (i.e., securities held by affiliates). Form 144 is notification to the SEC of this intention to sell and must take place at the time the sell order is placed with the broker-dealer.

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