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Overview
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 Rule
144(e) is one of the conditions to use of Rule 144
Requirements
- Amount of securities sold in a three-month period
can't exceed the greater of
- 1% of the shares or other units of the class
outstanding, as shown by the most recent report or statement published by the
issuer, or
- The average weekly volume of trading in such
securities
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February
2008 Changes
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Volume
limitations have been relaxed for debt securities
- By adding an alternative volume limitations
for debt securities -- new Rule 144(e)(2)
- Allows resales of up to 10% of the relevant tranche
in a three month period
- Added to final release, not in the original
proposal
_________
- Per new Rule 144(a)(4)
which adds debt securities as a defined term for purposes of Rule 144
- Includes non-participating preferred stock and
asset-backed securities
Other
changes
- Note added to
address how a pledgee of securities
should calculate the 144(e) volume limitation
- Other text changes made to rule
Changes
are effective 2.15.08
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Effective February 15, 2008
144(e)(1) Sales by affiliates
- (e) Limitation on amount of securities sold. Except as hereinafter
provided, the amount of securities sold for the account of an affiliate of the
issuer in reliance upon this section shall be determined as follows:
(1) If any securities are sold for the account of an affiliate of the
issuer, regardless of whether those securities are restricted, the amount of
securities sold, together with all sales of securities of the same class sold
for the account of such person within the preceding three months, shall not
exceed the greatest of:
i. one percent of the shares or other units of the class outstanding as
shown by the most recent report or statement published by the issuer, or
ii. the average weekly reported volume of trading in such securities on
all national securities exchanges and/or reported through the automated
quotation system of a registered securities association during the four calendar
weeks preceding the filing of notice required by paragraph (h), or if no such
notice is required the date of receipt of the order to execute the transaction
by the broker or the date of execution of the transaction directly with a market
maker, or
iii. The average weekly volume of trading in such securities reported
pursuant to an effective transaction reporting plan or an effective national
market system plan as those terms are defined in Rule 242.600 of this chapter
during the four-week period specified in paragraph (e)(1)(ii) of this section. |
144(e)(2) Debt securities
- (e) Limitation on amount of securities sold. Except as hereinafter
provided, the amount of securities sold for the account of an affiliate of the
issuer in reliance upon this section shall be determined as follows:
****
If the securities sold are debt securities, then the amount of debt
securities sold for the account of an affiliate of the issuer, regardless of
whether those securities are restricted, shall not exceed either the limitation
set forth in paragraph (e)(1) or, together with all sales of securities of the
same tranche (or class when the securities are non-participatory preferred
stock) sold for the account of such person within the preceding three months,
ten percent of the principal amount of the tranche (or class when the securities
are non-participatory preferred stock) attributable to the securities sold. |
144(e)(3) Determination of
amount
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Determination of Amount. For the purpose of determining the amount of securities specified in paragraph (e)(1) of this section and, as applicable, paragraph (e)(2) of this section, the following provisions shall apply: |
 (i) Convertible securities
- Where both convertible securities and securities of the class into
which they are convertible are sold, the amount of convertible securities sold
shall be deemed to be the amount of securities of the class into which they are
convertible for the purpose of determining the aggregate amount of securities of
both classes sold;
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(ii) Pledged securities
- The amount of securities sold for the account of a pledgee of those
securities, or for the account of a purchaser of the pledged securities, during
any period of three months within six months (or within one year if the issuer
of the securities is not, or has not been for a period of at least 90 days
immediately before the sale, subject to the reporting requirements of section 13
or 15(d) of the Exchange Act) after a default in the obligation secured by the
pledge, and the amount of securities sold during the same three-month period for
the account of the pledgor shall not exceed, in the aggregate, the amount
specified in paragraph (e)(1) or (2) of this section, whichever is applicable;
_________
Following note will be effective 2.15.08:
Note to 230.144(e)(3)(ii). Sales by a pledgee of securities pledged by a
borrower will not be aggregated under paragraph (e)(3)(ii) with sales of the
securities of the same issuer by other pledgees of such borrower in the absence
of concerted action by such pledgees.
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-
New note to Rule 144(e)(3)(ii) codifies
that, in cases involving two or more pledgees, as long as the
pledgees are not the
same person under Rule 144(a)(2) and are not acting in concert and the loans
and pledges are
bona fide transactions, if a pledgor defaults on several pledges, each pledgee
may sell the pledged
restricted securities in the amount permitted by the volume limitations in Rule
144(e), less any ales made by the pledgor during the relevant period, without having to
aggregate the sale with
sales by other pledgees of the same securities from the same pledgor
-
Final release commentary II.F.5
Dec 2007
- Proposal release commentary II.E.5
June 2007
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(iii) Donated securities
- The amount of securities sold for the account of a donee of those
securities during any three-month period within six months (or within one year
if the issuer of the securities is not, or has not been for a period of at least
90 days immediately before the sale, subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act) after the donation, and the amount of
securities sold during the same three-month period for the account of the donor,
shall not exceed, in the aggregate, the amount specified in paragraph (e)(1) or
(2) of this section, whichever is applicable;
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(iv) Trusts
- Where securities were acquired by a trust from the settlor of the
trust, the amount of such securities sold for the account of the trust during
any three-month period within six months (or within one year if the issuer of
the securities is not, or has not been for a period of at least 90 days
immediately before the sale, subject to the reporting requirements of section 13
or 15(d) of the Exchange Act) after the acquisition of the securities by the
trust, and the amount of securities sold during the same three-month period for
the account of the settlor, shall not exceed, in the aggregate, the amount
specified in paragraph (e)(1) or (2) of this section, whichever is applicable;
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(v) Estates
- The amount of securities sold for the account of the estate of a
deceased person, or for the account of a beneficiary of such estate, during any
three-month period and the amount of securities sold during the same three-month
period for the account of the deceased person prior to his death shall not
exceed, in the aggregate, the amount specified in paragraph (e)(1) or (2) of
this section, whichever is applicable; provided, that no limitation on amount
shall apply if the estate or beneficiary of the estate is not an affiliate of
the issuer;
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(vi) Action in concert
- When two or more affiliates or other persons agree to act in concert
for the purpose of selling securities of an issuer, all securities of the same
class sold for the account of all such persons during any three-month period
shall be aggregated for the purpose of determining the limitation on the amount
of securities sold;
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(vii) Registered or exempt securities
- The following sales of securities need not be included in determining
the amount of securities to be sold in reliance upon this section:
(A) Securities sold pursuant to an effective registration statement under the
Act;
(B) Securities sold pursuant to an exemption provided by Regulation A (230.251
through 230.263) under the Act;
(C) Securities sold in a transaction exempt pursuant to section 4 of the Act (15
U.S.C. 77d) and not involving any public offering; and
(D) Securities sold offshore pursuant to Regulation S (230.901 through
230.905, and Preliminary Notes) under the Act.
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Effective until 2.15.08
144(e)(1) Sales by affiliates
- Except as hereinafter provided, the amount of securities which may be
sold in reliance upon this rule shall be determined as follows:
(1) If any securities are sold for the account of an affiliate of the issuer,
regardless of whether those securities are restricted, the amount of securities
sold, together with all sales of securities of the same class sold for the
account of such person within the preceding three months, shall not exceed the
greatest of:
i. one percent of the shares or other units of the
class outstanding as shown by the most recent report or statement published by
the issuer, or
ii. the average weekly reported volume of trading in
such securities on all national securities exchanges and/or reported through the
automated quotation system of a registered securities association during the
four calendar weeks preceding the filing of notice required by paragraph (h), or
if no such notice is required the date of receipt of the order to execute the
transaction by the broker or the date of execution of the transaction directly
with a market maker, or
iii. The average weekly volume of trading
in such securities reported pursuant to an effective transaction reporting plan
or an effective national market system plan as those terms are defined in Rule
242.600 of this chapter during the four-week period specified in paragraph (e)(1)(ii) of this section.
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144(e)(2) Sales by
non-affiliates SEC_CODE_REF_0090001192884
- Sales by persons other than affiliates. The amount of restricted
securities sold for the account of any person other than an affiliate of the
issuer, together with all other sales of restricted securities of the same class
for the account of such person within the preceding three months, shall not
exceed the amount specified in paragraphs (e)(1)(i), (1)(ii) or (1)(iii) of this
section, whichever is applicable, unless the conditions in paragraph (k) of this
rule are satisfied.
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144(e)(3) Determination of
amount
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Determination of Amount. For the purpose of determining the amount of securities specified in paragraphs (e)(1) and (2) of this rule, the following provisions shall apply: |
144(e)(3)(i)
- Where both convertible securities and securities of the class into
which they are convertible are sold, the amount of convertible securities sold
shall be deemed to be the amount of securities of the class into which they are
convertible for the purpose of determining the aggregate amount of securities of
both classes sold;
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144(e)(3)(ii)
- The amount of securities sold for the account of a pledgee thereof, or
for the account of a purchaser of the pledged securities, during any period of
three months within one year after a default in the obligation secured by the
pledge, and the amount of securities sold during the same three-month period for
the account of the pledgor shall not exceed, in the aggregate, the amount
specified in paragraph (e)(1) or (2) of this section, whichever is applicable.
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144(e)(3)(iii)
- The amount of securities sold for the account of a donee thereof
during any period of three months within one year after the donation, and the
amount of securities sold during the same three-month period for the account of
the donor, shall not exceed, in the aggregate, the amount specified in paragraph
(e)(1) or (2) of this section, whichever is applicable;
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144(e)(3)(iv)
- Where securities were acquired by a trust from the settlor of the
trust, the amount of such securities sold for the account of the trust during
any period of three months within one year after the acquisition of the
securities by the trust, and the amount of securities sold during the same
three-month period for the account of the settlor, shall not exceed, in the
aggregate, the amount specified in paragraph (e)(1) or (2) of this paragraph,
whichever is applicable;
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144(e)(3)(v)
- The amount of securities sold for the account of the estate of a
deceased person, or for the account of a beneficiary of such estate, during any
period of three months and the amount of securities sold during the same period
for the account of the deceased person prior to his death shall not exceed, in
the aggregate, the amount specified in subparagraph (1) or (2) of this
paragraph, whichever is applicable; Provided, That no limitation on amount shall
apply if the estate or beneficiary thereof is not an affiliate of the issuer;
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144(e)(3)(vi)
- When two or more affiliates or other persons agree to act in concert
for the purpose of selling securities of an issuer, all securities of the same
class sold for the account of all such persons during any period of three months
shall be aggregated for the purpose of determining the limitation on the amount
of securities sold;
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144(e)(3)(vii)
- The following sales of securities need not be included in determining
the amount of securities sold in reliance upon this section: securities sold
pursuant to an effective registration statement under the Act; securities sold
pursuant to an exemption provided by Regulation A (Rules 251 through 263) under
the Act; securities sold in a transaction exempt pursuant to Section 4 of the
Act and not involving any public offering; and securities sold offshore pursuant
to Regulation S (Rules 901 through 905 and Preliminary Notes) under the Act.
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Other
Matters
SEC FAQs
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SEC
Interpretive Release 33-6099 1979
Rule
144(e)
- 113.01
National securities exchanges
Rule
144(e)(1)
- 114.01
Effect of a public offering
- 114.02
Four-week period determination
- 214.01
Notice to transfer agent not publication
- 214.02
Unreported trading
Rule
144(e)(3)
- 116.01
Regulation S resales
- 216.01
Pledgor default
- 216.02
Pledge of bank holding company shares
- 216.03
Donee aggregation
Rule
144(f)
- 117.01
Principal of a brokerage firm
- 117.02
Customer limit order
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Related Topics
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