By Rule 144: How to Sell Restricted Stock
Rule 144 dey set holding period and quarterly volume cap for insider sales of restricted stock. Underwriter no fit waive am. See which cap dey bind today.
Rule 144 na SEC rule wey allow person wey hold restricted stock — shares wey dem buy direct from company instead of exchange — resell am for public market without registering the sale. E set minimum holding period. For anybody wey count as affiliate of the issuer, e also limit how much stock fit leave the market inside any three months. Rule 144 na federal securities law. No underwriter or board fit waive am. Na this one clearly separate the rule from the lockup agreement wey most readers dey think about.
Rule 144 and underwriter lockup na two different locks
Lockup na private contract. Before IPO lockup expiration, insiders and early investors dey sign agreement with underwriting banks say dem no go sell for stated period, usually 180 days from pricing. The people wey write the contract fit change am. Banks dey grant early lockup releases and waivers often enough to matter. Many agreements also allow some shares to come out before time once price test dey met. Prospectus dey disclose the date itself, and our guide to how to find lockup expiration date show where to check.
Rule 144 na different kind of thing. Na rule wey dem adopt under Securities Act. E cover every holder of restricted or control securities, no matter wetin their contracts talk. E no get waiver mechanism at all. When both rules apply, na the later one dey control. Shareholder wey lockup end yesterday don comot from the contract, but e still dey inside Rule 144.
How long you need hold restricted stock?
Holding period na the first condition. E depend on one question: company dey file periodic reports with SEC? For restricted securities of reporting company, the period na six months. For issuer wey no dey report, na one year. The clock start from the date wey person acquire the shares from issuer or issuer affiliate and fully pay for am. This date fit be years before the stock ever trade publicly.
After the holding period, the process depend on who dey sell. Non-affiliate, meaning holder wey no get control relationship with the company, get short list of conditions left. After six months, sale only need current public information about issuer. After one year, shares generally come free from Rule 144 conditions. Affiliate never age out. Officer, director or anybody else wey get control relationship with issuer must continue meet every condition for as long as that status last, plus roughly three months after e end.
The clock start from acquisition. So e make sense to check where the date land for companies wey just list.
The exact SQL behind every number
SELECT
ticker,
any(issuer_name) AS issuer,
formatDateTime(min(listing_date), '%b %e, %Y') AS listed_on,
formatDateTime(addMonths(min(listing_date), 6), '%b %e, %Y') AS eligible_from,
dateDiff('day', today(), addMonths(min(listing_date), 6)) AS days_remaining
FROM global_markets.stocks_ipos
WHERE listing_date > addMonths(today(), -6)
AND listing_date <= today()
AND ticker != ''
AND ticker NOT IN ('SPCX')
GROUP BY ticker
ORDER BY days_remaining ASC, ticker ASC
LIMIT 15For restricted shares wey person acquire from issuer on listing day itself, for example through concurrent private placement, six-month date go fall where the table show. Paloma Acquisition Corp I reach am on Aug 17, 2026, 3 days from today, and the countdown cover 15 recent listings altogether. Pre-IPO investors wey pay for their shares years before don pass this test long before the company get ticker. These dates dey close to when standard 180-day lockup go expire. Na one reason people dey mix the two locks together.
What be the Rule 144 volume limit for affiliates?
Affiliate fit sell no more than the greater of two amounts inside any rolling three-month window:
- 1% of the shares outstanding for that class, as issuer’s latest report show, or
- average weekly reported trading volume for the four calendar weeks before notice filing.
The important word na greater. The 1% test na floor, no be ceiling. For stock wey dey trade heavily, the four-week test fit allow much more than 1%. For stock wey barely dey trade, the 1% figure na wetin make sale possible at all. The panel below run both tests for six popular names, using the four full weeks of trading data wey end some sessions ago.
The exact SQL behind every number
SELECT
v.ticker AS ticker,
round(s.shares_out / 100 / 1e6, 2) AS cap_shares_m,
round(v.weekly_volume / 1e6, 2) AS cap_weekly_m,
round(greatest(s.shares_out / 100, v.weekly_volume) / 1e6, 2) AS quarterly_cap_m,
if(v.weekly_volume >= s.shares_out / 100,
'four-week volume',
'one percent of shares') AS larger_test
FROM
(
SELECT
ticker,
toFloat64(sum(volume)) / 4 AS weekly_volume
FROM global_markets.stocks_daily_aggs
WHERE ticker IN ('AAPL', 'MSFT', 'KO', 'ADP', 'AXP', 'BLK')
AND date >= today() - 32
AND date < today() - 4
GROUP BY ticker
) AS v
INNER JOIN
(
SELECT
arrayJoin(tickers) AS ticker,
toFloat64(argMax(basic_shares_outstanding, (filing_date, period_end))) AS shares_out
FROM global_markets.stocks_income_statements
WHERE hasAny(tickers, ['AAPL', 'MSFT', 'KO', 'ADP', 'AXP', 'BLK'])
GROUP BY ticker
) AS s ON s.ticker = v.ticker
WHERE s.shares_out > 0
ORDER BY cap_weekly_m DESCFor AAPL, 1% of shares outstanding come to 147.48 million shares. The four weeks of trading data average 281.54 million shares per week. The bigger figure, and therefore the quarterly cap, come from the four-week volume test. For the last row, BLK allow 4.01 million shares per quarter based on the four-week volume test.
Which test win depend on liquidity, and the dividing line clear. If stock average weekly turnover pass 1% of its shares outstanding, volume test go give the bigger number. Below that line, the 1% floor take over. The next panel arrange every company with recent filing into weekly turnover groups.
The exact SQL behind every number
SELECT
multiIf(
weekly_turnover_pct < 1, 'under 1%',
weekly_turnover_pct < 2, '1% to 2%',
weekly_turnover_pct < 4, '2% to 4%',
weekly_turnover_pct < 8, '4% to 8%',
'8% or more') AS turnover_bucket,
count() AS companies
FROM
(
SELECT 100 * (v.weekly_volume / s.shares_out) AS weekly_turnover_pct
FROM
(
SELECT
ticker,
toFloat64(sum(volume)) / 4 AS weekly_volume
FROM global_markets.stocks_daily_aggs
WHERE date >= today() - 32
AND date < today() - 4
AND ticker NOT IN ('SPCX')
GROUP BY ticker
HAVING weekly_volume > 0
) AS v
INNER JOIN
(
SELECT
arrayJoin(tickers) AS ticker,
toFloat64(argMax(basic_shares_outstanding, (filing_date, period_end))) AS shares_out,
max(period_end) AS latest_period
FROM global_markets.stocks_income_statements
GROUP BY ticker
HAVING shares_out > 1000000
AND latest_period >= today() - 400
) AS s ON s.ticker = v.ticker
)
GROUP BY turnover_bucket
ORDER BY min(weekly_turnover_pct)1055 companies turn over less than 1% of their shares during an average week of the last four weeks. Na the group where 1% floor dey bigger than the other test. For the other side, 1220 names turn over 8% or more of their shares every week, so four weeks of volume greatly pass the floor. The same affiliate, holding the same percentage of two different companies, fit face quarterly caps wey differ by order of magnitude.
Manner of sale and current public information
Two more conditions dey alongside the cap for affiliates. Manner of sale mean say shares must go through broker in ordinary brokers’ transaction, or to a market maker. Seller no fit solicit buyers, and broker no fit receive special commission. Current public information mean say issuer must dey up to date with periodic reports. Company wey late with annual report fit leave its affiliates unable to use Rule 144 until the filing enter. Our guide to the most common SEC filings explain which reports count.
When Form 144 dey required?
Once affiliate sales inside rolling three-month window pass 5,000 shares or $50,000 total value, Form 144 notice must go to SEC, and sale suppose happen within a set period. If sales stay under both limits, no notice dey required. Both tests add all sales inside the window. So five separate 1,200-share tickets inside three months go pass the share threshold together, even though none of them pass am alone.
Form 144 na notice of intention. Form 4 na report of wetin insider actually do, filed after the transaction. E better show how large insider sales normally be. The panel below group one year of reported open-market insider sales by size.
The exact SQL behind every number
SELECT
multiIf(
sale_value < 50000, 'under $50k',
sale_value < 250000, '$50k to $250k',
sale_value < 1000000, '$250k to $1m',
sale_value < 5000000, '$1m to $5m',
'$5m or more') AS sale_size_bucket,
count() AS reported_sales
FROM
(
SELECT
if(toFloat64(transaction_value) > 0,
toFloat64(transaction_value),
toFloat64(transaction_shares) * toFloat64(transaction_price_per_share)) AS sale_value
FROM global_markets.stocks_form4
WHERE transaction_code = 'S'
AND transaction_date >= today() - 365
AND transaction_date <= today()
AND transaction_shares > 0
AND transaction_price_per_share > 0
)
WHERE sale_value > 0
GROUP BY sale_size_bucket
ORDER BY min(sale_value)81840 reported open-market sales fall below $50,000 during the past year, while 32726 reach $5m or more. One small ticket alone no settle anything, because notice test look at the whole three-month window, not one trade. Reading these filings need small practice, and how to read a Form 4 take you through the fields.
Where 10b5-1 plans and blackout windows fit
Rule 144 na one layer. Two other layers dey on top for most public-company insiders.
The first one na issuer’s own trading policy. Most companies close blackout window around quarter-end and reopen am a few days after results publish. Na company policy, no be SEC rule, and company set its own terms.
The second one na Rule 10b5-1, separate rule wey provide defense against insider trading claims when trades come from written plan adopted at a time wey insider no hold material non-public information. Under current structure, director or officer must wait through cooling-off period between adopting plan and first trade under am. Company dey disclose plan adoptions inside periodic reports. 10b5-1 plan no change any Rule 144 condition. Sales under the plan still count against the same quarterly cap, and dem still need Form 144 once dem pass the thresholds.
How to read the thresholds correctly
The figures on this page describe the current structure of the rule. SEC dey amend Rule 144 from time to time. Check current rule text and SEC guidance before you rely on any single number. Also take specific fact pattern to securities lawyer. This page teach mechanics. E no be legal advice.
FAQ
Lockup expiration mean say insiders fit sell freely?
No. Lockup na private contract with underwriters, and expiry only remove that contract. Affiliates still need meet Rule 144 volume cap, manner-of-sale conditions, current-information condition and Form 144 notice. Dem must also follow any blackout window wey issuer’s own policy impose.
Wetin be restricted security?
Na security wey person acquire direct from issuer or affiliate through private transaction, instead of registered public offering. Shares from pre-IPO financing round, equity grant or private placement na common examples. Dem carry legend until transfer agent remove am.
How dem calculate Rule 144 volume cap?
Take the greater of 1% of outstanding shares for that class and average weekly reported volume for the four calendar weeks before notice filing. That amount na the ceiling for affiliate sales across any rolling three-month window.
Wetin be the difference between Form 144 and Form 4?
Form 144 na notice wey affiliate file before selling once three-month total pass 5,000 shares or $50,000. Form 4 na report wey officer, director or 10% owner file after transaction don complete.
Non-affiliates need follow Rule 144 volume cap?
No. Non-affiliate wey hold restricted securities of reporting company for six months only need current-public-information condition. After one year, e fit sell free from Rule 144 conditions. Volume cap and notice apply to affiliates.
Every panel here carry the SQL wey produce am. Expand one to see how dem count the four-week average. To run the same volume-cap test for company wey you dey follow, ask for am in plain English on the Strasmore terminal.