Affiliate's Free Trading Stock

Free Market Stock Owned by Affiliates has restrictions under Rule 144

There are instances where officers and directors of a public company buy stock in the market. It is important for them to note that there are some restrictions on this stock under Rule 144.

There is a clear SEC interpretation posted on the SEC website saying that free market stock bought by affiliates has to be sold under all restrictions that apply to 144 stock of affiliates – except the holding period.

These important 144 restrictions are the restrictions on the volume of securities, the manner of sale, that there must be current information on the company, filing, etc.

Here is the SEC interpretation on affiliates buying free trading stock

http://www.sec.gov/divisions/corpfin/guidance/rule144interp.htm

Section 204. Rule 144(a)(3)

204.01   An affiliate purchased common stock of its company in a private transaction from a non-affiliate who acquired the shares in the open market. Since such shares are not restricted securities within the meaning of Rule 144(a)(3), the one-year holding period requirement of Rule 144(d)(1) does not apply to resales of these shares by the affiliate. affiliate. However, all of the other requirements of the rule would have to be complied with by the affiliate for any of its sales of the shares under the rule. [April 2, 2007]

(Emphasis added.)

___

Note the phrase "for any of its sales."

One of the more important restrictions under Rule 144 is the restriction on treating the market, which is to say the restriction on soliciting buyers.

The person selling the securities shall not: (i) Solicit or arrange for the solicitation of orders to buy the securities in anticipation of or in connection with such transaction, or (ii) Make any payment in connection with the offer or sale of the securities to any person other than the broker or dealer who executes the order to sell the securities.