FINRA Investment Banking Representative Practice Exam

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When must an affiliate file notice of a proposed sale under Rule 144?

If they wish to sell 1,000 shares.

If they wish to sell 5,000 shares or $50,000 in any three-month period.

The requirement for an affiliate to file a notice of a proposed sale under Rule 144 is specifically tied to the volume limits associated with the sale of securities. According to Rule 144, affiliates must file a notice if they intend to sell more than 5,000 shares or securities that have an aggregate sale price exceeding $50,000 within any three-month period.

This rule is in place to ensure that there is transparency regarding the transactions of affiliates, which could potentially affect the market for those securities. The filing of the notice provides necessary information to regulators and the market about the affiliate's intention to sell, helping to prevent market manipulation and ensuring fair trading practices.

The threshold for triggering the filing requirement under Rule 144 is designed to capture significant sales while not burdening affiliates with excessive reporting for smaller transactions that are unlikely to disrupt the market. Therefore, if an affiliate wishes to sell, it must be at least compliant with these specific thresholds in order to proceed without facing potential legal ramifications for an unregistered sale.

If they want to sell any number of shares over $100,000.

If they sell shares that exceed their total holdings.