In the context of Regulation D. A private purchaser wishes to
invest directly in an issuer but hopes to acquire unrestricted
securities. Through arrangements and understandings with the issuer, a stockholder with shares that are either restricted securities currently eligible for
sale under
Rule 144 or unrestricted securities sells the shares to the private purchaser. At about the same time, the issuer sells an equivalent number of shares to the stockholder. The
Securities & Exchange Commission's view is that the shares taken by the private purchaser from the stockholder will be restricted securities within the meaning of
Rule 144(a)(3). The holding period will date to the private acquisition. A
public resale of the shares acquired from the stockholder without regard to the conditions of
Rule 144 would raise serious issues under Section 5 of the
Securities Act for all parties to the
transactions.