10.10.1. The FAST Act Exemption
In 2015, the Fixing America’s Surface Transportation (FAST) Act created a new registration exemption from the Securities Act of 1933 for the private resale of unregistered securities. This exemption made it easier for early stakeholders and investors to sell their unregistered shares in a new company.
The FAST Act amended the Securities Act with the introduction of Section 4(a)(7), which exempts the resale of unregistered securities as long as the following conditions hold:
• Purchasers must be accredited investors (or the seller has a reasonable belief they are)
• Securities have been authorized and outstanding for at least 90 days
• No general solicitation or advertising can be used when offering or selling the securities
• Seller is not the issuer, a subsidiary of the issuer, or an underwriter
• Seller or any person receiving a commission for the sale is not a “bad actor,” as defined under Regulation D
• Issuer is not a blank check company (such as a SPAC) or shell company
• Transaction is not part of an unsold allotment to an underwriter
• For non-reporting companies, the seller must provide the purchaser with general information about the issuer, including: