Understanding SEC Rule 144: Resale of Restricted Securities

Selling securities acquired through private placements or from an affiliate of the issuing company can be complex. SEC Rule 144 provides a safe harbor for the public resale of these ‘restricted’ and ‘control’ securities, aiming to prevent insider trading and ensure transparency in the market. This article explains the key aspects of Rule 144 as of March 2, 2026.

What are Restricted and Control Securities?

Securities are often considered ‘restricted’ when they are acquired in a private placement – a sale of securities directly to investors without a public offering. ‘Control securities’ are held by individuals who control the issuer. Both types of securities have limitations on resale. The Securities Act of 1933 generally requires registration of all offers and sales of securities unless an exemption applies [2].

The Purpose of Rule 144

Rule 144 aims to strike a balance between protecting investors and allowing liquidity for those holding restricted and control securities. It provides an exemption from registration requirements under certain conditions, allowing these securities to be resold into the public market [1]. Without Rule 144, selling these securities could be considered an illegal, unregistered distribution.

Key Conditions for Resale Under Rule 144

To qualify for resale under Rule 144, several conditions must be met:

• Holding Period: Generally, securities must be held for a specific period before they can be sold. This holding period varies depending on whether the issuer is current in its SEC reporting requirements.
• Current Public Information: The issuer must be current in its reporting obligations with the Securities and Exchange Commission (SEC).
• Volume Limitations: There are limits on the amount of securities that can be sold within a three-month period. These limitations are calculated as a percentage of the issuer’s outstanding shares.
• Manner of Sale: Sales must typically be made through ordinary brokerage transactions, not directly to a single buyer.
• Notice of Proposed Sale: Form 144 must be filed with the SEC, providing details about the sale, the seller and the securities.

Understanding the “Underwriter” Definition

A crucial aspect of Rule 144 is avoiding being classified as an “underwriter.” Section 2(a)(11) of the Securities Act broadly defines an underwriter as someone who purchases securities from an issuer with a view to distribution [2]. Even individual investors can be considered underwriters if they act as intermediaries in the distribution process.

Form 144: Filing Requirements

Form 144 requires specific information, including:

• Name of the issuer
• SEC file number of the issuer
• Address and phone number of the issuer
• Name of the seller
• Relationship of the seller to the issuer
• Title and number of securities to be sold
• Aggregate market value of the securities
• Date of sale

The form as well requires details about the acquisition of the securities and any prior sales made within the past three months. A representation is made that the seller is unaware of any undisclosed material adverse information regarding the issuer.

Recent Example (as of March 2, 2026)

According to a Form 144 filing, Malik Ducard sold Pinterest, Inc. Securities on several dates in late 2025 and early 2026:

• December 24, 2025: 6,000 shares for $155,162.00
• January 2, 2026: 22,936 shares for $600,31.00
• February 2, 2026: 22,935 shares for $505,84.00

Key Takeaways

• Rule 144 provides a pathway for reselling restricted and control securities.
• Compliance with the rule’s conditions is essential to avoid legal issues.
• Understanding the definition of an “underwriter” is critical.
• Filing Form 144 is required for most sales under Rule 144.

Disclaimer

This article provides general information about SEC Rule 144 and should not be considered legal advice. Consult with a qualified securities attorney before making any decisions about selling restricted or control securities.