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Blog: SEC proposes changes to Rule 144 | Cooley LLP


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Surprise!  Yesterday, the SEC announced that it had voted, without an open meeting, to propose amendments to Rule 144 to revise the method for determining the holding period essentially eliminating tacking for securities “acquired upon the conversion or exchange of certain ‘market-adjustable securities.’ The proposed amendment is intended to reduce the risk of unregistered distributions in connection with sales of those securities.” It is worth emphasizing that the proposed amendment “would not affect the use of Rule 144 for most convertible or variable-rate securities transactions.” Essentially, the amendment is intended to apply to “floating priced” or “floating rate” convertibles, often referred to as “death-spiral” converts, issued by companies that do not have securities listed, or approved for listing, on a national securities exchange. The proposed amendments would also: ....

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