Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
What is Restricted & Control Stock (Rule 144)?
Restricted stock is acquired in an unregistered private transaction; control stock is held by officers, directors, or 10%+ holders. Rule 144 governs resale: restricted stock must be held 6 months (reporting issuers) or 1 year (non-reporting) before sale. Affiliates face volume limits - in any 90 days, the greater of 1% of outstanding shares or the average weekly trading volume of the prior four weeks.
Restricted & Control Stock (Rule 144): a worked example
A founder who received private-placement shares cannot sell them publicly until the holding period has passed.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.
Dividend Discount Model
A stock is worth the present value of its future dividends.