Rule 144 – A Deep Dive – Part 4 – Holding Period
In this fourth installment of my series on Rule 144, I will continue discussing the various conditions for the use of the Rule, including the meaty holding period requirements. In the first installment, I provided a high-level review of Rule 144 – see HERE; in the second, I discussed definitions including the impactful “affiliate” definition – see HERE; and in the third I reviewed the current public information requirements – see HERE.
Conditions for Use of Rule 144
General
Rule 144 provides certain conditions that must be met by selling affiliates and selling non-affiliates which conditions vary depending on whether the Issuer of the securities is a reporting or non-reporting company and whether the Issuer is or ever has been a shell company. The high-level Rule 144 requirements for non-affiliates include: (i) holding period; (ii) availability of current public information; and (iii) no shell status ineligibility. The high-level Rule 144 requirements for affiliates (i.e.
SEC Filed Actions Against 19 Firms and One Individual Trader for Violation of Rule 105 of Regulation M
ABA Journal’s 10th Annual Blawg 100
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On September 16, 2014, the SEC filed actions against 19 firms and one individual trade for short selling violations in advance of public stock offerings in violation of Rule 105 of Regulation M. The SEC has actively enforced Regulation M since its enactment in 1996. Regulation M is designed to prevent stock manipulation during public offerings and Rule 105 particularly prohibits short selling of stock within five business days of participating in an offering for the same stock. That is, you cannot short stock and cover your short by buying the same stock from the underwriter in a public offering. Rule 105 prevents downward pressure on a company’s stock price during the offering process.
The SEC’s current investigation found that 19 firms and one individual trader charged in these latest cases engaged in short selling of particular stocks shortly before they bought shares from an underwriter, broker, or dealer participating in a follow-on
