Rule 144A
Encyclopedia
Rule 144A. Securities Act of 1933, as amended (the "Securities Act") provides a safe harbor
from the registration requirements of the Securities Act of 1933
for certain private resales of minimum $500,000 units of restricted securities to QIBs (qualified institutional buyers), which generally are large institutional investors that own at least $100 million in investable assets. When a broker or dealer is selling securities in reliance on Rule 144A, it is subject to the condition that it may not make offers to persons other than those it reasonably believes to be QIBs..
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 in order 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 on which non-U.S. companies rely when accessing the U.S. capital markets.
Since 1990, the Nasdaq
Stock Market offers a compliance review process which grants Depository Trust & Clearing Corporation (DTCC) book-entry access to 144A securities. Nasdaq launched an Electronic Trading Platform for 144A securities called PORTAL.
Rule 144A should not be confused with rule 144, which permits unregistered sales of restricted and controlled securities within certain limits.
Safe harbor
The term safe harbor has several special usages, in an analogy with its literal meaning, that of a harbor or haven which provides safety from weather or attack.-Legal definition:...
from the registration requirements of the Securities Act of 1933
Securities Act of 1933
Congress enacted the Securities Act of 1933 , in the aftermath of the stock market crash of 1929 and during the ensuing Great Depression...
for certain private resales of minimum $500,000 units of restricted securities to QIBs (qualified institutional buyers), which generally are large institutional investors that own at least $100 million in investable assets. When a broker or dealer is selling securities in reliance on Rule 144A, it is subject to the condition that it may not make offers to persons other than those it reasonably believes to be QIBs..
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 in order 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 on which non-U.S. companies rely when accessing the U.S. capital markets.
Since 1990, the Nasdaq
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
Stock Market offers a compliance review process which grants Depository Trust & Clearing Corporation (DTCC) book-entry access to 144A securities. Nasdaq launched an Electronic Trading Platform for 144A securities called PORTAL.
Rule 144A should not be confused with rule 144, which permits unregistered sales of restricted and controlled securities within certain limits.