Series 79: Private Resales Of Securities To Qualified Institutional Buyers (Rule 144A)

Private Resales of Securities to Qualified Institutional Buyers (Rule 144A)

Rule 144A creates a nonexclusive safe harbor from registration requirements for private resales of securities to qualified institutional buyers, or QIBs. As defined in Rule 144A, a QIB is an entity—individuals don’t count—such as an insurance company, investment company, pension plan, bank, or the like, that manages at least $100 million in securities on a discretionary basis for its own account or for the accounts of other QIBs. The $100 million threshold does not include securities issued by the QIB or an affiliate. (For registered broker-dealers, the minimum amount under management is only $10 million.) To qualify as a QIB, a bank must also have a net worth of at least $25 million.

Recent amendments to Rule 144A permit general solicitations and advertisements and other offers to persons other than QIBs, provided that securities are only actually sold to buyers reasonably believed to be QIBs. These changes simply