General Securities Sales Supervisor (Series10) Practice Exam

What is the holding period required to sell control stock purchased in the open market under Rule 144?

1. Immediately after purchase

2. After a 6-month holding period

3. After a 1-year holding period

4. After a 2-year holding period

The correct answer is: Immediately after purchase

The correct choice indicates that control stock purchased in the open market can be sold immediately after purchase under Rule 144. This regulation specifically pertain to the sale of securities that are considered control stock, which is typically held by corporate insiders or affiliates. Unlike restricted stock, which has specific holding period requirements, control stock does not have a mandated holding period for selling once it is acquired in the open market. It’s important to note that while control persons can sell immediately after purchasing control stock, there are still restrictions related to volume and manner of sale that apply. This means that even though they can sell right away, there may be conditions to adhere to regarding how much they can sell at a given time to prevent manipulation of the market. Choosing immediately after purchase accurately reflects the specific conditions of control stock under Rule 144, thereby aligning with regulatory expectations and preventing any misunderstanding of holding periods pertaining to sales of such securities.