Ch 2 Deck 13 Flashcards
When can one start selling Regulation S shares on foreign exchanges?
–Immediately
When can one start selling Regulation S debt shares to U.S. citizens?
After a 40 day restricted period
When can one start selling Regulation S Domestic Equity shares to U.S. citizens?
1 year
Investors who buy securities in a private placement cannot go out and immediately sell them in a private placement under
RULE 144 – RE-SALES OF RESTRICTED AND CONTROL SECURITIES
securities in a private placement can be resold in a private placement under
Rule 144 exemptions
Rule 144 restricted securities are
securities acquired from the issuer in a private placement or other exempt offering.
Rule 144 control securities are
securities held by an affiliate of the issuer.
One who is controlled by the issuer, or one who controls the issuer.
Rule 144 definition of control
A person “controls” an issuer if the person has power to direct management (a director, executive officer or major shareholder-10% or more stock)
Under Rule 144 Non-affiliates selling restricted securities that are reporting companies have a holding period of
6 months
Under Rule 144 Non-affiliates selling restricted securities that are non-reporting companies have a holding period of
12 months
Under Rule 144 Non-affiliates selling restricted securities must (prior to selling)
remove legend off the securities which can only be done with the permission of the issuer (a transfer agent does this).
Under Rule 144 – Control Persons selling non-restricted securities have a holding period of
no holding period, but other requirements hold
Under Rule 144 – Control Persons selling non-restricted securities have trading volume limits of no more than
– greater of:
1% of the issuer’s outstanding securities OR
Average weekly trading volume of the securities during the four weeks preceding the sale
Under Rule 144 – Control Persons selling non-restricted securities must provide
Adequate current information about the issuer must be available
Under 144 Control Persons selling non-restricted securities, the affiliate must file a notice of proposed sale with the SEC on Form 144 if the sale is
more than 5,000 shares or $50,000 dollars
Under Rule 144 – Control Persons selling restricted control securities reporting companies have a holding period of
6 months
Under Rule 144 – Control Persons selling restricted control securities non-reporting companies have a holding period of
12 months
Under Rule 144 – Control Persons selling restricted control securities trading volume limit is no more than
greater of:
- 1% of the issuer’s outstanding securities OR
- Average weekly trading volume of the securities during the four weeks preceding the sale
Under Rule 144 – Control Persons selling restricted control securities if the sale is more than 5,000 shares or $50,000 dollars the affiliate must
file a notice of proposed sale with the SEC on Form 144
Good for tracking insiders!
Allows issuers and non-issuers to sell restricted securities to QIBs without restrictions.
Rule 144A – Private Re-sales of Securities to QIBs
FOUND ON EXAM A LOT!
QIB stands for
Qualified Institutional Buyer
Under rule 144A, Once sold, QIBs can sell these restricted securities to
other QIBs
QIBs are entities (no individuals) such as
insurance companies, investment companies, pension plans, banks, etc. who manage at least $100 million in assets.
Creates a private market in restricted securities that otherwise would be illiquid
Rule 144A – Private Re-sales of Securities to QIBs
Trading platform for 144A securities is
The Nasdaq operated PORTAL
Can Regulation S be used in US Territories?
NO
DC
Puerto Rico
US Virgin Islands
Regulation D is open to companies that are
both foreign and domestic
Under Rule 144 control persons selling restricted control securities are subject to
both volume limits and holding period restrictions
Under Rule 144 control persons selling non-restricted control securities are subject to
only subject to volume limits but not holding period restrictions
Rule 144A allows an exemption to the trading restrictions of 144 for
QIB’s
Rule 144A allows sale of restricted to securities to
QIB’s
Rule 144A allows sales to QIB’s by
both issuers and non-issuers
What is allowed to be sold under 144A
Corporate stocks
Corporate bonds
What is not allowed to be sold under 144A
Open end funds (mutual funds)
Unit Investment Trusts
Exchange Traded funds
Baskets of assets with varying values which are bought and sold on an exchange at a price which reflects the average price of the underlying assets.
Exchange Traded Funds (ETF)
An investment company that offers a fixed, unmanaged portfolio, generally of stocks and bonds, as redeemable “units” to investors for a specific period of time. It is designed to provide capital appreciation and/or dividend income.
Unit Investment Trust
