{"id":180,"date":"2019-10-15T04:06:48","date_gmt":"2019-10-15T04:06:48","guid":{"rendered":"http:\/\/securitiesregslawyer.com\/blog\/?p=180"},"modified":"2019-10-18T20:39:24","modified_gmt":"2019-10-18T20:39:24","slug":"the-poor-mans-security-resale-exemption","status":"publish","type":"post","link":"https:\/\/securitiesregslawyer.com\/blog\/the-poor-mans-security-resale-exemption\/","title":{"rendered":"The Poor Man\u2019s Security Resale Exemption"},"content":{"rendered":"

Heads-up to anyone holding restricted securities:<\/h4>\n

Better act now because <\/p>\n

Congress\u2019s Fixing America\u2019s Surface Transportation Act <\/p>\n

could fix you pretty good! <\/h6>\n

Woe to the person holding securities of a company that is not freely traded. People who are affiliates\/controlling persons of the company or people who have bought in a private placement or hold restricted securities are in a bind if they want to liquidate any of their holdings.<\/p>\n

Until recently there were very few ways to sell their non-freely traded securities. They could try to sell under SEC Rule 144, but this is subject to holding period and, in the case of affiliates (controlling persons), limits on amounts sold. They could try to sell under SEC Rule 144A, but then only to Qualified Institutional Buyers. That is a buyer who generally has $100 million in securities owned or under their management.<\/p>\n

Congress changed this with the Fixing America\u2019s Surface Transportation Act. It added section 4(a) (7) to the Securities Act of 1993. This exempts from the Securities Act\u2019s registration requirements sales by other than the issuer or a subsidiary, subject to the following additional seven (7) conditions: <\/p>\n

    \n
  1. \tThe purchaser(s) must be an \u201caccredited investor\u201d as defined in SEC Regulation D;\n
  2. \tThere can be no general solicitation or advertising;\n
  3. \tIf the company is not an SEC reporting company, specified information must be furnished to a requesting prospective purchaser;\n
  4. \tThe seller and anyone participating in the offering for compensation can\u2019t be a \u201cbad actor\u201d as defined in SEC Rule 506(d)(1);\n
  5. \tThe issuer must be engaged in business, can\u2019t be in the organizational stage or in bankruptcy, and is not a blank check, blind pool or shell company;\n
  6. The transaction is not part of an unsold underwriting allotment; and\n
  7. \tThe security being sold must be of a class that has been outstanding for at least 90 days.\n<\/ol>\n

    There is even more good news. Sales under Section 4(a)(7) are exempt from the requirements to register or qualify the security under state Blue Sky Laws. <\/p>\n

    The only bad news is that buyers of these securities are deemed to have purchased restricted securities, and can\u2019t resell them other than pursuant to an exemption from the Securities Act registration requirements, e.g. Section 4(a)(7).<\/p>\n

    If you have any questions, comments or would like to discuss this further please feel free to contact me (phone 212 455 0476; cell 914 646 8035; email msimkin@securitiesregslawyer.com).<\/p>\n","protected":false},"excerpt":{"rendered":"

    Heads-up to anyone holding restricted securities: Better act now because Congress\u2019s Fixing America\u2019s Surface Transportation Act could fix you pretty good! Woe to the person holding securities of a company that is not freely traded. People who are affiliates\/controlling persons of the company or people who have bought in a private placement or hold restricted … Continue reading The Poor Man\u2019s Security Resale Exemption<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-180","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/posts\/180","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/comments?post=180"}],"version-history":[{"count":13,"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/posts\/180\/revisions"}],"predecessor-version":[{"id":193,"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/posts\/180\/revisions\/193"}],"wp:attachment":[{"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/media?parent=180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/categories?post=180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/securitiesregslawyer.com\/blog\/wp-json\/wp\/v2\/tags?post=180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}