Can i sell restricted stock

To begin the legend removal process, an investor should contact the company that issued the securities, or the transfer agent for the securities, to ask about the procedures for removing a legend. Removing the legend can be a complicated process requiring you to work with an attorney who specializes in securities law.

If a dispute arises about whether a restrictive legend can be removed, the SEC will not intervene. Removal of a legend is a matter solely in the discretion of the issuer of the securities. State law, not federal law, covers disputes about the removal of legends. Thus, the SEC will not take action in any decision or dispute about removing a restrictive legend.

Search SEC. Securities and Exchange Commission. Investor Publications. Rule Selling Restricted and Control Securities. What Are Restricted and Control Securities? What Are the Conditions of Rule ? The rule's five conditions are summarized below: Additional securities purchased from the issuer do not affect the holding period of previously purchased securities of the same class. Holding Period. Compensation income is earned income paid to you for successfully doing your job.

If you think about the value of restricted stock units as compensation for your work, their value should logically be the same as what you receive in your weekly, bi-weekly, or monthly paycheck. And in fact, RSUs are taxed the same as your regular paycheck, too.

The major difference is how each type of compensation is paid out to you. Your paycheck is given to you as cash that gets deposited into your bank account. Vested restricted stock units paid as shares, however, is company stock… meaning the value is on paper and not realized until you sell shares. Assuming you are not in a lock-up or blackout period or facing any other restrictions , you may be able to sell the shares you received from your RSUs right away.

Doing so allows you to convert the value of company stock into cash, just like your paycheck. If you sell your RSU shares immediately after they are deposited into your brokerage account, the tax impact of a sale will likely be minimal. As you can see, it is possible that you experience no tax impact on selling shares. This is a good reason to consider selling right away, and transferring the paper value of the shares into actual cash you can use.

The next factor to consider when determining the best time to sell is whether you even want to own company stock. If you accept the suggestion that your RSUs are compensation income for services rendered, why not take that compensation as cash?

Or would you use it for another need? In this example, you will receive shares of stock. For affiliates the initial holding period was reduced from two years to one year. Since , affiliates have been subject to an initial holding period of only six months, and nonaffiliates are subject to a one-year holding period. Changes to Rule that allow more liquidity and increased demand for restricted stock in technology companies have resulted in the creation of a number of online secondary markets for restricted stock and other illiquid securities that otherwise would have thin or no markets.

These markets are highly speculative, and restricted stockholders must ensure compliance with what are often complicated rules issued by employers regarding potential sales of restricted shares.

Some of these exchanges include SecondMarket, which originally did business as Restricted Stock Partners; the Private Equity Exchange; Cogent Partners; and several others, including a small number of dealer-brokers that have maintained thin markets for private companies for many years.

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This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. You must contact the transfer agent of the issuing company to have a stock legend removed, which frees the stock for trading. Without the consent of the issuer, which may require the involvement of an attorney, you cannot have the legend removed and sell your stock.

Conduct an ordinary brokerage transaction. If you are affiliated with the company, your trade must be routine, with no additional commissions paid to the broker and no solicitations to buy made by either the seller or the broker. File required notices with the SEC. If you are an affiliated person, you may have to file Form with the SEC no more than three months before you sell your restricted stock.

Csiszar has served as a technical writer for various financial firms and has extensive experience writing for online publications.