SEC Rule 144A

What is SEC Rule 144A?

SEC Rule 144A of the Securities Act of 1933 provides a safe harbor from certain restrictions normally imposed to protect public investors. It can be applied when reselling private securities to qualified institutional buyers (QIBs), QIBs are buyers that are considered financially sophisticated and are legally recognized by securities market regulators as needing less protection.

Rule 144A enables QIBs to more readily trade securities among themselves. It allows them to sidestep the two-year holding period requirement for privately placed securities and allows firms registered with the Securities and Exchange Commission (SEC), as well as foreign companies providing information to the SEC, to avoid providing financial statements to buyers. However, purchasers are entitled to receive reasonably current information about the issuer upon request.

Rule 144A is a safe harbor widely invoked by non-U.S. companies seeking access to capital markets, though the securities sold by a foreign private issuer must not be of the same class as a class listed in the U.S. For support and additional information, explore our Regulatory Disclosure solutions.