Section 4(a)(1-1/2)

Definition:

Section 4(a)(1-1/2) of the Securities Act is not formally established by any written SEC rule or regulation although it is now thought that Section 4(a)(7) largely codifies Section 4(a)(1-1/2). Section 4 (a)(1-1/2) is a non-statutory, interpretive resale exemption developed over time and stemming from Section 5 of the Securities Act (although it technically relies on Section 4(a)(1)). It relates to private transactions involving holders of Restricted Securities who meet appropriate standards of sophistication and therefore can follow Section 4(a)(2) or Regulation D procedures.

A set of mechanisms has been developed by market participants that permit limited resales from one sophisticated purchaser (such as Accredited Investors) in a Private Placement to another.

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