Are debt securities treated differently than equity securities?
A5.1: Yes. The new amendments to Rule 144 create significant liquidity for funds and their partners that are affiliates8 of the issuer and that wish to sell restricted debt securities9 or control debt securities without registration in reliance on Rule 144. First and foremost, the manner of sale requirement of the rule no longer applies to any sale of restricted debt securities or control debt securities. Second, the volume limitations on the resale by affiliates of restricted debt securities and control debt securities are now increased to 10 percent (from 1 percent) of all sales of the same tranche within a three-month period. Q5.2: A fund (or its partners) holds non-participatory preferred stock of an issuer. Is this stock treated as an equity security or debt security for Rule 144 purposes? A5.2: The SEC classifies non-participatory preferred stock, as well as asset-backed securities, as debt securities for Rule 144 purposes. Therefore, the new changes to Rule 144 that eliminate ap
