Restricted Stock

Insider holdings that are under some other kind of sales restriction. Restricted stock must be traded in compliance with special SEC regulations. These regulations are outlined under Section 1244 of the Internal Revenue Code.

Also referred to as "Letter Stock" and "Section 1244 Stock".




Taobiz explains Restricted Stock
Insiders are given restricted stock after merger and acquisition activity, underwriting activity, and affiliate ownership in order to prevent premature selling that might adversely affect the company. Restricted stock cannot be sold without registration with the SEC (under the Securities Act of 1933) or some other special exemption.