Rule 6 of 14 in this unit2.1.1

2.1.1 Equity Securities

SIE outline 2.1.1

Six Months, or One Year Under Rule 144

Rule 144(d)(1): at least six months must elapse between the date of acquisition of restricted securities and any resale where the issuer is subject to the Exchange Act reporting requirements: and at least one year where the issuer is not a reporting company. NOT "the holding period runs from when the shares were registered." It runs from the date of acquisition, and it is the issuer's REPORTING status: not its size or its listing: that picks six months or twelve.

The method for this kind of question
  1. 1h45m ÷ 80 items = 78.75 seconds per item. A voting or Rule 144 item should cost about 45.
  2. Three facts decide which formula you are in: does the charter provide cumulative voting? does the issuer report? is the seller an affiliate?
  3. Cumulative voting = shares × seats, and it favours the MINORITY holder. Statutory = your share count per seat.
  4. Rule 144(e) takes the GREATEST of 1% outstanding and the 4-week average weekly volume: never automatically the 1%.
  5. Rule 144(d): 6 months if the issuer reports, 1 year if it does not. The clock runs from acquisition.
  6. Liquidation: sort by claim type, not by how safe the name sounds. A subordinated debenture still outranks preferred stock.
  7. Next: SIE Practice Quiz #5: Equity Securities, every answer explained.

Now answer

1 question on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

An individual buys shares of a reporting company's stock in an unregistered, private transaction. Under Rule 144, how long must she hold them before reselling?

How sure are you?

Correct: A. Rule 144(d) sets a six-month holding period where the issuer is subject to Exchange Act reporting requirements.
B. Three months appears nowhere in Rule 144's holding-period text.
C. One year is the period for a non-reporting issuer's securities, not a reporting one.
D. Two years is not a period Rule 144 sets for either type of issuer.

Unit: SIE outline 2.1.1

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