What is the consequence of not filing Form 144 as required?

Filing Form 144 is crucial for persons intending to sell restricted or control securities because it provides necessary notice to the Securities and Exchange Commission (SEC) about the potential sale of these securities. Failure to file Form 144 when required could lead to the sale being deemed illegal. This is particularly relevant as it involves compliance with regulations regarding the sale of securities by insiders or those with access to non-public information. Without the proper notice, the transaction may violate securities laws, which can result in significant legal consequences for the seller, including penalties, fines, or even injunctions against the sale.

The other options do not correctly reflect the implications of not filing Form 144. Legal penalties may actually arise from a failure to file, which contradicts the notion of avoiding legal penalties. Market volatility is not directly tied to the individual act of not filing Form 144, and investor confidence may indeed be shaken if it becomes known that securities laws are being disregarded, but this is more a secondary effect rather than a direct consequence of the failure to file the form. Thus, the consequence of a failure to file is primarily that the resulting sale may be considered illegal, impacting compliance with securities law.