By Rule 144 and Selling Restricted Stock
Rule 144 sets the holding period and quarterly volume cap on insider sales of restricted stock, and no underwriter can waive it. See which cap binds today.
Rule 144 is the SEC rule that lets a holder of restricted stock, shares bought directly from a company rather than on an exchange, resell them in the public market without registering the sale. It sets a minimum holding period, and for anyone who counts as an affiliate of the issuer it also caps how much stock can leave in any three months. Rule 144 is federal securities law: no underwriter or board can waive it, and that is the cleanest line between the rule and the lockup agreement most readers have in mind.
Rule 144 and the underwriter lockup are two different locks
A lockup is a private contract. Ahead of an IPO lockup expiration, insiders and early investors sign an agreement with the underwriting banks promising not to sell for a stated window, usually 180 days from pricing. The parties who wrote that contract can rewrite it. Banks grant early lockup releases and waivers often enough to matter, and many agreements let a slice of shares out ahead of schedule once a price test is met. The date itself is disclosed in the prospectus, and our guide to finding a lockup expiration date shows where to look.
Rule 144 is a different kind of object. It is a rule adopted under the Securities Act, it reaches every holder of restricted or control securities whatever their contracts say, and it has no waiver mechanism at all. When both apply, the later of the two governs. A shareholder whose lockup ended yesterday is out of the contract and still inside the rule.
How long do you have to hold restricted stock?
The holding period is the first condition, and it turns on one question: does the company file periodic reports with the SEC? For restricted securities of a reporting company the period is six months. For an issuer that does not report, it is one year. The clock starts on the date the shares were acquired from the issuer or from an affiliate of the issuer and fully paid for, which is often years before the stock ever trades publicly.
After the holding period the path splits by who is selling. A non-affiliate, meaning a holder with no control relationship to the company, has a short list left: at six months the sale needs only current public information about the issuer, and at one year the shares generally come free of Rule 144's conditions. An affiliate never ages out. An officer or director, or anyone else in a control relationship with the issuer, keeps meeting every condition for as long as that status lasts and for roughly three months after it ends.
The clock runs from acquisition, so it is worth seeing where it lands for companies that have only just listed.
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 acquired from the issuer on the listing day itself, in a concurrent private placement for instance, the six-month mark falls where the table shows. Paloma Acquisition Corp I reaches it on Aug 17, 2026, 3 days from today, and the countdown holds 15 recent listings in all. Shares that pre-IPO investors paid for years earlier cleared this test long before the company had a ticker. These dates sit close to where a standard 180-day lockup runs out, which is one reason the two locks get conflated.
What is the Rule 144 volume limit for affiliates?
An affiliate may sell, in any rolling three-month window, no more than the greater of two amounts:
- 1% of the shares outstanding of that class, as shown in the issuer's most recent report, or
- the average weekly reported trading volume over the four calendar weeks before the notice is filed.
The word doing the work is greater. The 1% test is a floor rather than a ceiling. For a stock that trades heavily, the four-week test allows far more than 1%. For a stock that barely trades, the 1% figure is what keeps a sale possible at all. The panel below runs both tests on six household names, over the four full weeks of tape ending a few sessions back.
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 comes to 147.48 million shares, while the four weeks of tape average 281.54 million shares a week. The larger figure, and so the quarterly cap, comes from the four-week volume test. At the bottom of the table, BLK allows 4.01 million shares a quarter off the four-week volume test.
Which test wins is a question about liquidity, and it has a clean dividing line. A stock whose average week turns over more than 1% of its shares outstanding is one where the volume test gives the bigger number. Below that line the 1% floor takes over. The next panel sorts every company with a recent filing into weekly turnover buckets.
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 turned over less than 1% of their shares in an average week of the past four, the group where the 1% floor is the larger of the two tests. At the other end, 1220 names turned over 8% or more of their shares each week, where four weeks of volume dwarfs the floor. The same affiliate, holding the same percentage of two different companies, can face quarterly caps that differ by an order of magnitude.
Manner of sale and current public information
Two more conditions sit alongside the cap for affiliates. Manner of sale means the shares have to go out through a broker in an ordinary brokers' transaction, or to a market maker, with no solicitation of buyers by the seller and no special commission to the broker. Current public information means the issuer has to be up to date on its periodic reports. A company late on an annual report can leave its own affiliates unable to use Rule 144 until the filing lands. Our guide to the most common SEC filings covers which reports count.
When is a Form 144 required?
Once an affiliate's sales in a rolling three-month window pass 5,000 shares or $50,000 in aggregate value, a Form 144 notice goes to the SEC and the sale is expected to follow within a set period. Under both figures, no notice is required. Both tests aggregate across the window, so five separate 1,200-share tickets inside three months clear the share threshold together even though no single one of them does.
Form 144 is a notice of intent. Form 4 is the report of what an insider actually did, filed after the fact, and it is the better record of how large insider sales tend to run. The panel below buckets a 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 landed under $50,000 over the trailing year, and 32726 came in at $5m or more. A single small ticket settles nothing on its own, since the notice test looks at the whole three-month window rather than one trade. Reading these filings takes a little practice, and how to read a Form 4 walks through the fields.
Where 10b5-1 plans and blackout windows fit
Rule 144 is one layer. Two others sit on top of it for most public-company insiders.
The first is the issuer's own trading policy. Most companies close a blackout window around the end of each quarter and reopen it a couple of days after results are published. That is company policy rather than SEC rule, and the company sets its own terms.
The second is Rule 10b5-1, a separate rule that offers a defense against insider trading claims when trades run from a written plan adopted at a time the insider held no material non-public information. Under the current structure, a director or officer waits out a cooling-off period between adopting a plan and the first trade under it, and plan adoptions are disclosed in the company's periodic reports. A 10b5-1 plan changes none of the Rule 144 conditions. Sales made under a plan still count against the same quarterly cap and still need a Form 144 above the thresholds.
Reading the thresholds correctly
The figures on this page describe the rule's current structure, and the SEC amends Rule 144 from time to time. Check the current rule text and the SEC's guidance before relying on any single number, and take a specific fact pattern to a securities lawyer. This page teaches mechanics. It is not legal advice.
FAQ
Does a lockup expiration mean insiders can sell freely?
No. The lockup is a private contract with the underwriters, and its expiry removes only that contract. Affiliates still meet the Rule 144 volume cap, the manner-of-sale conditions, the current-information condition and the Form 144 notice, plus whatever blackout window the issuer's own policy imposes.
What is a restricted security?
A security acquired directly from the issuer or from an affiliate in a private transaction rather than in a registered public offering. Shares from a pre-IPO financing round, an equity grant or a private placement are the common cases, and they carry a legend until the transfer agent removes it.
How is the Rule 144 volume cap calculated?
Take the greater of 1% of the outstanding shares of that class and the average weekly reported volume over the four calendar weeks before the notice is filed. That amount is the ceiling for an affiliate's sales across any rolling three-month window.
What is the difference between Form 144 and Form 4?
Form 144 is a notice filed before an affiliate sells, once the three-month total passes 5,000 shares or $50,000. Form 4 is the report an officer, director or 10% owner files after a transaction is complete.
Do non-affiliates have to follow the Rule 144 volume cap?
No. A non-affiliate holding restricted securities of a reporting company for six months needs only the current-public-information condition, and after one year sells free of Rule 144's conditions. The volume cap and the notice apply to affiliates.
Every panel here carries the SQL that produced it, so expand one to see how the four-week average was counted. To run the same volume-cap test on a company you follow, ask for it in plain English on the Strasmore terminal.