SEC Eases Restrictions On Resale Of Restricted Securities

On December 7, 2007, the U.S. Securities and Exchange Commission (SEC) issued final rules amending existing Rules 144 and 145 under the Securities Act of 1933 (Securities Act).¹ The revisions are intended to increase the liquidity of privately sold, restricted securities and decrease issuers' cost of raising capital. Rule 144 provides a non-exclusive safe harbor that permits investors to resell restricted securities without registration pursuant to the exemption under Section 4(1) of the Securities Act. The amendments reduce the holding period required before restricted securities may be sold, liberalize the manner of sale and volume limitations, simplify the Form 144 filing requirements, and codify certain SEC staff interpretations relating to Rule 144. The final rules further eliminate the "presumptive underwriter" doctrine under Rule 145. The revised rules take effect on February 15, 2008.