We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Rule 144?

By Tim Zurick
Updated Feb 08, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Rule 144 governs the sale of restricted or control securities — stocks that could not otherwise be sold because of the United States' Securities Act of 1933. The Securities Act was the U.S. federal government's first regulation of the stock market and was enacted in the wake of the stock market crash of 1929. Among the act’s objectives were to help level the playing field between the average investor and the “insiders” who might have an unfair advantage because of their position in a regulated company.

Restricted securities are those that have not been previously registered with the U.S. Securities and Exchange Commission (SEC), which oversees stocks. Publicly issued stocks are registered as part of the initial offering process, but certain other stocks escape this scrutiny. Small, localized offerings often are exempted, as are stocks paid out as part of an employee benefit plan or as compensation for professional services. Restricted stock certificates normally are stamped with a notice of their restricted status.

Control securities are owned by “insiders,” directors or large shareholders of a company who are in a position to potentially control its policies or management. These insiders or affiliates are assumed to have access to information that is unavailable to members of the investing public. This combination of inside knowledge and ownership of large blocs of stock constitute an unfair advantage and enhance the potential for fraud. Rule 144 provides a balancing remedy for this advantage when affiliates want to liquidate their holdings.

Rule 144 lays out five basic conditions to help ensure that the transactions are equitable:

1. Holding Period: Restricted securities of a company subject to the reporting requirements of the Securities Exchange Act of 1934 must be held for at least six months. For those not required to report, the holding period is one year.

2. Adequate Current Information: Before a sale can be made, the issuing company must have complied with the reporting requirements of the Exchange Act

3. Trading Volume Formula: The volume sold by an affiliate during any three month period is limited to either 1 percent of the outstanding shares or 1 percent of the weekly trading volume during the four weeks prior to the sale, whichever is greater.

4. Ordinary Brokerage Transactions: Sales by affiliates must be handled as normal transactions at normal commission rates, without solicitation of buy orders.

5. Filing a Notice of Proposed Sale: The SEC must be notified if aggregate sales exceed 5,000 shares or $50,000 US Dollars in any three month period — and if the entire sale is not completed.

Finally, Rule 144 requires the removal from the certificates of the stamp designating the stock as restricted. This can be removed only by the stock transfer agent. The concurrence of the issuing company’s attorney also is required.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Discussion Comments
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.