THE SEC CONSIDERS CHANGES TO THE RULE 144 HOLDING PERIOD

July, 2007

This Article is superseded by final changes issued by the SEC, discussed HERE.

The Securities and Exchange Commission, on May 23, put forth several proposals for revisions to Rule 144 of the Securities Act. The proposed changes are titled “Revisions to Rule 144 and Rule 145 to Shorten Holding Period for Affiliates and Non-Affiliates.”

In essence, the proposed changes would reduce the one year holding period for restricted securities to six months for reporting companies. The holding period for non-reporting companies (pink sheets) would remain at one year.

Further, the proposed rules seek to significantly reduce the sale requirement applicable to non-affiliates who avail themselves of Rule 144. Specifically, the proposed rule would abandon the following requirements:

• The filing of Form 144 would no longer be required.
• The “manner of sale” provisions would no longer be required. Presently, the manner of sale provisions require that a one-year 144 sale be made in a brokered transaction with no pre-arranged solicitation of the order.
• The volume limitations would no longer apply.

Bear in mind, the preceding requirements would be dropped only for non-affiliates. The “current public information” requirement would remain in place under the proposed rule.

The full description of the proposed rule can be read here .

The SEC is soliciting comments on the proposal until September 4, 2007. Readers can submit comments by using the SEC’s internet comment form at http://www.sec.gov/rules/proposed.shtm .

No date is set for decision on the proposed changes–the best estimate is several month following the end of the comment period. We’ll update when and if the rule goes final. The most likely date for passage is December of 2007.

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