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Series 7 practice questionhardEquity Securities — Rule 144 — Restricted Stock

Under SEC Rule 144, restricted securities acquired from an issuer in a private placement must be held for a minimum of how long before they can be sold in the public market?

  1. A6 months if the issuer is a reporting company✓ Correct answer
  2. B3 months
  3. C18 months
  4. D2 years regardless of reporting status
Explanation

Why A — 6 months if the issuer is a reporting company

SEC Rule 144 requires a minimum holding period of 6 months for restricted securities of a reporting company (one that files periodic reports with the SEC). For non-reporting companies, the holding period is 1 year. After the holding period, the securities may be sold subject to volume limitations, manner of sale requirements, and filing of Form 144 if the sale exceeds certain thresholds.

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