Series 7 practice questionhardEquity Securities — Rule 144 — Control Securities
Which of the following statements is TRUE regarding control securities under Rule 144?
- AControl securities are always restricted securities
- BControl securities can never be sold publicly
- CAffiliates are exempt from volume limitations on control stock
- DControl securities have no holding period requirement if acquired on the open market✓ Correct answer
Explanation
Why D — Control securities have no holding period requirement if acquired on the open market
Control securities are shares held by affiliates (officers, directors, or 10%+ shareholders), regardless of how they were acquired. If control stock was purchased on the open market (not restricted), there is no holding period requirement. However, affiliates are still subject to volume limitations, manner of sale requirements, current public information requirements, and Form 144 filing when selling any securities.
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