Series 14: 6.2.4.1. Restricted Vs. Control Securities

6.2.4.1. Restricted vs. Control Securities

There are a couple things to note about the relationship between restricted securities and control securities. First, a security can have both statuses at the same time, for example when an affiliate acquires shares through a private placement. If an affiliate wishes to sell control securities that are also restricted securities, the affiliate is subject to both holding period restrictions and volume trading limits. Second, when control shares are sold, they become restricted shares, even if they were not restricted before the affiliate sold them.

Example: Nate owns restricted shares in a company where he also sits on the board. It’s a non-reporting company, so Nate’s minimum holding period is 12 months. During this time, Nate’s shares are both restri