Section 4(1½)

USA

A Section 4(1½) private placement transaction is a resale or secondary distribution of restricted securities that technically relies on the Section 4(1)}} registration exemption. The Section 4(1½) resale procedure is not formally established by any written <

Sellers using this resale procedure typically sell to sophisticated investors (such as accredited investors) who can directly purchase the unregistered securities from an issuer and follow the type of rules typically proscribed for Section 4(2)}} or Regulation D private placements by issuers (see Practice Note, Section 4(2) and Regulation D Private Placements (<).

These procedures include:

• Non-distribution letters in which the purchaser agrees to contractual resale restrictions and makes certain representations and warranties as to its sophistication and investment intent.

• A legal opinion that no registration is required.

• Legended securities.

• Stop transfer instructions.

• Large minimum denominations or investments.

These restrictions vary based on the issuer, the nature of the investors and the size of the offering.

Related terms

Regulation S

Rule 144

Rule 144A