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Legal Opinions on the Resale of Securities: The Rule 144 Safe Harbor and Private and Public Resale Exemptions

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Conducted on Wednesday, August 10, 2022

Recorded event now available

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This CLE course will discuss the preparation of legal opinions regarding resales of unregistered securities in the public markets relying upon the resale exemptions available under the federal securities laws, and, when available, the Rule 144 safe harbor. Section 4(a)(1 ½) and Section 4(a)(7) opinions regarding private secondary market resales will be discussed.


Any attorney writing a Rule 144 opinion, a Section 4(a)(1) opinion when Rule 144 is not available, or a legal opinion regarding the available exemption for private secondary market resales should have a thorough understanding of the circumstances under which exemption and the Rule 144 safe harbor are available and what facts, opinions, assumptions, and qualifications should be part of each type of opinions.

Section 4(1 ½) is a court-established hybrid of Section4(a)(1) and Section 4(a)(2) of the Securities Act of 1933. This was the only exemption available for private resales of securities until Section 4(a)(7) became law in 2015. Section 4(a)(7) is not available in some circumstances when the Section 4(a)(1 ½) exemption can be used. A strong foundation of documents and information related to the original purchase of the shares from the issuer and the private resale are essential. Representations letters setting forth facts that fit the legal criteria for each exemption are necessary to support a proper opinion letter.

The panel will discuss (a) the criteria for qualifying for each public and private resale exemption, (b) how to convincingly establish that the shares were validly issued and fully paid, (c) establishing the shell status of the issuer, (d) what documents and information are needed to support the availability of each exemption, and (e) how to deal with challenging situations involving availability of essential documents and information.

Listen as our authoritative panel discusses these and other important considerations in connection with writing an opinion regarding a public or private resale of securities.



  1. Overview of exemptions from registration on the resale of securities
    1. Rule 144 (it is a safe harbor, not an exemption)
    2. Section 4(a)(1) and 4(a)(3) exemptions for public resales
    3. Section 4(1 1/2) and Section 4(a)(7) exemptions for private secondary market resales
  2. Opinions typically provided by shareholder’s counsel or issuer’s counsel regarding the availability of (1) an exemption under the federal securities laws to the requirement that shares must be registered for resale in a current and effective registration statement, (2) the Rule 144 safe harbor, and/or (3) a registration statement to permit a public or private resale of restricted stock
    1. Assumptions and qualifications contained in legal opinions: ABA opinion letter guidelines and recommendations of state bar associations
    2. Analysis of whether a seller acquired the shares with a view to distribution of the securities (holding periods), underwriter status, tacking of holding periods
    3. Due diligence: establishing that the shares were validly issued and fully paid, supporting the facts in your opinion with relevant documents, and analysis of corporate history and shell history
    4. Use of representations of the seller and buyer to provide solid support for Section 4(a)(1 ½) and Section 4(a)(7) opinions
    5. What essential opinions must be expressed in each letter? What are the necessary and acceptable assumptions and qualifications?
  3. Medallion Signature Guarantee programs seemed like a good idea at the time that they were adopted, but the arbitrary policies of some stock transfer agents and lack of availability of these guarantees have created nightmares for many shareholders
  4. Lost stock certificates--surety bonds, indemnification agreements


The panel will review these and other critical issues:

  • What requirements must be met for a shareholder to use the Rule 144 safe harbor and the exemption under Section 4(a)(1) to clear the restrictive legend from and resell stock in the public markets that is not registered for resale in a current and effective registration statement?
  • What requirements must be met for a shareholder to use the Section 4(1-1/2) and Section 4(a)(7) exemptions for private secondary market resales of stock?
  • How can counsel use representations letters from the issuer of securities, sellers, and buyers to provide solid factual foundations for opinions?
  • What assumptions and qualifications are necessary and appropriate in your opinion letters and what assumptions and qualifications should be rejected by the broker and stock transfer agent?
  • What opinions must be stated regarding the circumstances of the issuer of the securities and the seller so that the seller, issuer, stock transfer agent, and the broker can reasonably rely on the legal opinion?


Burningham, Branden
Branden T. Burningham

Burningham Law Group

Mr. Burningham has significant expertise in both registered and exempt offerings, including “PIPE”...  |  Read More

Logan, Ronald
Ronald J. Logan

Logan Law Firm

Mr. Logan emphasizes representation of investors and emerging companies in his business transactions practice and has...  |  Read More

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