SEC Law: Basics

1. Holding period. For issuers subject to the reporting requirements under the Securities Exchange Act of 1934 as amended, when the securities themselves are unregistered with the SEC (i.e. restricted securities), they must be held for six months. However, for nonreporting issuers, the holding period is one year.
2. Information about the company. Adequate current public information about the company must be available with the SEC.
3. Trading-volume formula. Limitations of Rule 144 on the maximum amount of stock you can sell must be followed.
4. Broker sale. The manner of sale must adhere to certain rules.
5. Filing with the SEC. A Form 144 must be properly filed concurrently with the placement of the sell order, unless your total sales within any three-month period involve fewer than 5,000 shares and less than $50,000.

For details on each of these Rule 144 resale requirements, see other FAQs in SEC Law: Rule 144.

On December 6, 2007, the SEC adopted amendments to Rule 144 (and Rule 145) that changed some of the requirements (see Release No. 33-8869). These amended rules became effective on February 15, 2008. The changes:

• shorten from one year to six months the holding period for restricted securities of companies subject to reporting under the Securities Exchange Act of 1934
• amend the requirement for the manner of sale to include resales through "riskless principal transactions" and amend the definition of "brokers' transactions" to include bid and ask postings on alternative trading systems
• increase the thresholds for filing Form 144 to 5,000 shares or $50,000, up from 500 shares and $10,000 (for now the SEC has decided not to combine Form 144 and Form 4 (Section 16 filing) into one filing, as has been suggested)

See page 21 of the SEC release for a useful chart that summarizes the requirements for resale of restricted securities held by affiliates and nonaffiliates.