Rule 144 manner of sale requirements

What the rule says

Paragraph (f) of Rule 144 sets how a sale must be carried out. It is a condition for affiliates and for anyone selling for the account of an affiliate under paragraph (b)(2); the non-affiliate path in (b)(1) lists only paragraphs (c)(1) and (d). Under (f)(1) the securities shall be sold in one of three ways: (i) brokers’ transactions within the meaning of section 4(4) of the Securities Act; (ii) transactions directly with a market maker, as defined in section 3(a)(38) of the Securities Exchange Act of 1934; or (iii) riskless principal transactions. A private sale to a buyer the seller found does not fit any of the three.

Paragraph (f)(2) adds two prohibitions on “the person selling the securities”: soliciting, or arranging for the solicitation of, orders to buy in anticipation of or in connection with the transaction, and making any payment in connection with the offer or sale to anyone other than the broker or dealer who executes the sell order.

Riskless principal transactions

A riskless principal trade is one where, after receiving a customer order, a broker or dealer buys (or sells) as principal in the market to satisfy it. Rule 144(f)(1)(iii) allows it only if three conditions hold: the offsetting trades are executed at the same price, exclusive of an explicitly disclosed markup or markdown, commission equivalent or other fee; the transaction is permitted to be reported as riskless under self-regulatory organization rules; and the requirements of paragraphs (g)(2) (applied to any markup, markdown, commission equivalent or fee), (g)(3) and (g)(4) are met.

What counts as a brokers’ transaction

Paragraph (g) defines the term for this rule. The broker must (1) do no more than execute the sell order as agent for the person on whose account the securities are sold; (2) receive no more than the usual and customary broker’s commission; (3) neither solicit nor arrange for the solicitation of customers’ buy orders in anticipation of or in connection with the transaction; and (4) after reasonable inquiry, not be aware of circumstances indicating that the seller is an underwriter or that the sale is part of a distribution. The broker is deemed aware of the facts in the Form 144 notice.

Paragraph (g)(3) lists inquiries that do not count as prohibited solicitation: inquiries to other brokers or dealers who indicated an interest in the previous 60 days; inquiries to the broker’s customers who indicated an unsolicited bona fide interest in the previous 10 business days; publishing bid and ask quotations in an inter-dealer quotation system as part of a bona fide inter-dealer market, if the broker published two-way quotes on at least twelve of the preceding thirty calendar days, with no more than four business days in succession without them; and publishing bona fide quotations in an alternative trading system on each of the last twelve business days. The rule’s notes say the broker should keep written evidence of unsolicited interest and, for protection, a copy of the Form 144 notice.

The broker’s reasonable inquiry

The notes to paragraph (g) list what a broker’s reasonable inquiry should include: how long the person has held the securities (with a physical inspection of certificates if practicable); how the securities were acquired; how much of the class was sold in the past three months by all persons whose sales are aggregated; whether the person intends to sell more of the class by other means; whether the person has solicited or arranged for solicitation of buyers; whether the person has paid anyone in connection with the sale; and the number of shares outstanding or the relevant trading volume. In practice this is why a broker will ask a Rule 144 seller to sign a representation letter.

Who is exempt from the manner-of-sale rule

Paragraph (f)(3) says (f) does not apply to securities sold for the account of the estate of a deceased person, or an estate beneficiary, provided the estate or beneficiary is not an affiliate of the issuer, and does not apply to debt securities. Every affiliate relying on Rule 144, and every person selling for the account of an affiliate or a recent affiliate, must comply. A non-affiliate who qualifies under paragraph (b)(1) does not need to meet (f).

Worked examples

A director of a listed company places a sell order with a full-service broker, who executes it on the exchange as agent for the usual commission and has not called around for buyers. That fits (f)(1)(i). The same director who lines up a friend to buy 50,000 shares and then asks a broker to “paper” the trade has arranged solicitation of a buyer, which (f)(2)(i) prohibits. A holder who pays a finder a fee for introducing a buyer breaks (f)(2)(ii) even if a broker executes the trade. An executor selling a non-affiliate decedent’s shares in a private transaction falls under the (f)(3)(i) exception. The checker above flags these patterns.

Limits of this page

This page reproduces the rule’s manner-of-sale conditions only. It does not settle whether a given trade satisfies Rule 144 overall, how a specific broker documents it, or how a particular alternative trading system reports quotations. Consult counsel or the broker’s compliance staff.

Related Rule 144 and Regulation D topics

More from the same rules: The Rule 144 volume limitation, The Rule 144 Form 144 filing threshold.

Sources

• 17 CFR 230.144, Persons deemed not to be engaged in a distribution and therefore not underwriters, eCFR current text (issue date October 29, 2026). Read November 2, 2026.

Edition read: eCFR 17 CFR Part 230, current text, issue date October 29, 2026 (read November 2, 2026). Rules are amended from time to time; check the current eCFR text and the SEC’s guidance before relying on any figure. This page quotes and summarizes the rule text and does not replace it.