What are restricted securities?
Some stocks are “restricted” or “unregistered”so designated because they were originally issued in a private sale or other transaction where they were not registered with the SEC. Restricted or unregistered securities may not be freely resold unless a registration statement is filed with the SEC or unless an exemption under the law permits resale.
A. Some stocks are “restricted” or “unregistered” so designated because they were originally issued in a private sale or other transaction where they were not registered with the SEC. Restricted or unregistered securities may not be freely resold unless a registration statement is filed with the SEC or unless an exemption under the law permits resale.
A. Restricted securities are stocks, warrants or other securities that are acquired directly or indirectly (for example by gift) from a public or private company or from an affiliate of the company in a transaction that is not registered by the SEC, and is also known as a private offering. For example, restricted stock can be acquired through corporate mergers, exercise of stock options, as bonus shares, or as compensation for services provided, but not through a public offering.
Restricted securities are generally those which are first issued in a private placement exempt from registration and which bear a restrictive legend. The legend commonly states that the securities are not registered and cannot be offered or sold unless they are registered with the S.E.C. or exempt from registration. The restrictive legend serves to ensure that the initial, unregistered sale is not part of a scheme to avoid registration while achieving some broader distribution than the initial sale. Normally, if securities are registered when they are first issued, then they do not bear any restrictive legend and are not deemed restricted securities.
