Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Wednesday, June 5, 2013

Notice under Rule 144

Rule 144 requires that a “Notice of Sale” on Form 144 be filed by any person for whose account the securities are being sold if the person is an affiliate at the time of sale, or was an affiliate during the 90 days preceding the sale, and is selling more than 5,000 shares or the shares being sold have an aggregate sale price of more than $50,000.
 
Public Availability of the Form 144 Notice Filing
Form 144 is publicly available upon filing through the SEC’s EDGAR database.  Rule 144(h) states that Form 144 must be filed only by the person for whose account a sale is being made under the rule.

Bona Fide Intent to Sell and Form 144
A person filing a notice on Form 144 is required to have the bona fide intention to sell the securities set forth in the form within a reasonable time after filing the notice on Form 144.

Filing Procedures for Form 144
Rule 144(h)(1) requires the filing of three copies of the notice on Form 144 with the SEC, and one copy with the principal exchange on which the securities are traded.
Rule 144 requires that the seller file Form 144 concurrently with either placing an order to sell the securities with a broker or executing the sale directly with a market maker.
 
Amendment of Form 144
An amendment is required for any material changes to the information provided. Form 144 can be corrected without penalty by filing an amended Form 144. The filing of an amended Form 144, however, does not cure any deficiencies regarding sales made after filing the initial form and before filing the amended form.
An  amendment to a previously filed Form 144 is not required to report the following events:
• The failure of a seller to sell the securities set forth in the Form 144;
• The listing of the issuer on a national securities exchange;
• A stock split by the issuer; or
• The number of shares allocated to each of two brokers for sale under Rule 144.
An amendment to Form 144 is required where a seller changes brokers to effect a sale under Rule 144.
 
Form 144 Representations
Form 144 sets forth that the person for whose account the securities are being sold represents by signing the form that he or she “does not know of any material adverse information in regard to the current or prospective operations of the issuer” that hasn’t been publicly disclosed.
 
Penalties for Misstatements in Form 144
Form 144 contains a statement warning persons filing the form that criminal liability under 18 U.S.C. § 1001 can result if intentional misstatements or omissions are made in the form.
 
Failure to File 144
A failure to file Form 144 when required to do so will render the Rule 144 unavailable. Since  Rule 144′s preliminary note requires that all of the conditions of the rule be satisfied in order for the safe harbor of Rule 144 to be available, the failure to file a Form 144 will render the rule unavailable.

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