SEC Law: Rule 144
Test your knowledge with our
Insider Trading quiz.
Listen to the new
podcast on the basics of SEC Law and insider trading!
Articles
(Jump to FAQs)
Merrill Freed and Steven Schraibman
Your advisors say now is the time to buy or sell your company stock or to exercise options. But before you proceed, you'd better understand the securities laws that apply. Part 1 focused on insider trading and Rule 10b5-1 plans. This article looks at other pitfalls of securities law, including short-swing-profits violations under Section 16(b), and required SEC filings, such as Form 4 and Form 144.
Return to top of this page FAQs
(Jump to articles)
"Affiliate" is a term used in the securities laws to refer to a person in a relationship of control with a company. "Control" denotes the power to direct the management or policies of the company in some way, and this is generally means...
Don't confuse restricted securities and restricted stock. They are very different...
This is the most common way to resell restricted securities not registered with the SEC, and the most common way for senior managers and directors to sell their stock. There are five core requirements of a Rule 144 sale, which include...
Rule 144 requires directors, officers, and large-block shareholders to follow certain...
For resales of restricted securities, the holding period depends on whether the stock is of a reporting or nonreporting company. Restricted securities must be held six months for...
To satisfy Rule 144, you must follow the resale rules for...
The SEC Rule 144 requirement that current public information about the company be available is met if the company has filed all the required reports under the Securities Exchange Act of 1934...
This can depend on whether you are still affiliated with the company. For options and stock issued under Rule 701, Rule 144 requires you to wait at least...
Under Rule 144, you must hold these restricted securities...
The amount of stock sold by an affiliate, together with all other sales by the affiliate within the preceding three months, cannot exceed the greater of...
Once your total sales during any three-month period exceed 5,000 shares or $50,000, you must make this filing even if the sale that puts you over the threshold is much smaller. Three copies...
You make the filing if you are an affiliate (e.g., a senior executive or a director) or a control person (e.g., you own a big block of stock) or have been one within...
Rule 144 requires that in most instances affiliates sell their securities in a "broker's transaction." The stockbroker must do no more than...
The tax treatment for private, pre-IPO, and large publicly traded companies is...
These privately negotiated sales may use what is informally referred to as the "Section 4(1-1/2)" exemption, which is a hybrid provision based on...
The legality of exercising stock options, swapping the stock for the buyer's shares, and then immediately...
Not surprisingly, anything you do with your company stock as an executive or director raises issues involving the securities laws, potential SEC reporting requirements, and liability risks...
You need to show that resale does not require you or your company to...
Yes. A consultant to a private company needs to find out whether the options or shares...
For senior executives, stock-settled SARs avoid the concerns about cashless exercises by officers and directors raised by...
Return to top of FAQs
Insider Trading
Tax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.
How Executives And Directors Can Avoid SEC Troubles Before Trading Their Company Stock (Part 2) 
