Rule 144A.
Securities Act of 1933, as amended (the "Securities Act") provides a
safe harbor
A safe harbor or harbour is literally a "place of shelter and safety, esp. for ships". It is used in many contexts:
Film and television
* Safe harbor (broadcasting), established in 1978 in the US, the time period in a television schedule during wh ...
from the
registration requirements of the
Securities Act of 1933 for certain private resales of minimum $500,000 units of
restricted securities to
qualified institutional buyers (QIBs), which generally are large
institutional investor
An institutional investor is an entity which pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked ...
s that own at least $100 million in investable assets. When a
broker
A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be con ...
or
dealer is selling
securities in reliance on Rule 144A, it may make offers to non-QIBs through general solicitations following an amendment to the Rule in 2012.
Since its adoption, Rule 144A has greatly increased the liquidity of the securities affected. This is because the institutions can now trade these formerly restricted securities amongst themselves, thereby eliminating the restrictions that are imposed to protect the public. Rule 144A was implemented to induce foreign companies to sell securities in the US
capital markets. For firms registered with the SEC or a foreign company providing information to the SEC,
financial statements need not be provided to buyers. Rule 144A has become the principal
safe harbor
A safe harbor or harbour is literally a "place of shelter and safety, esp. for ships". It is used in many contexts:
Film and television
* Safe harbor (broadcasting), established in 1978 in the US, the time period in a television schedule during wh ...
on which non-U.S. companies rely when accessing the U.S. capital markets.
Originally, in 1990, the
Nasdaq
The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
Stock Market offered a compliance review process which granted
The Depository Trust Company (DTC) book-entry access to Rule 144A securities. That review was later abandoned as unnecessary.
Securities And Exchange Commission
/ref> Nasdaq launched an Electronic Trading Platform for Rule 144A securities called PORTAL.
Rule 144A should not be confused with Rule 144, which permits public (as opposed to private) unregistered resales of restricted and controlled securities within certain limits.
References
{{Reflist
External links
17 CFR 230.144A - Private resales of securities to institutions
Rule 144A