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New Rule 144: Lower Illiquidity Discounts and Another Boost for the PIPE Market?


By: Espen Robak | November 29, 2007

The impact on valuations from proposed changes to Rule 144 is uncertain, but reductions in illiquidity discounts are expected. 

When rule 144 was introduced in 1972, it helped reduce the uncertainty and liquidity risk associated with restricted stock, then known as "letter stock."  However, it is doubtful that it actually made such shares more liquid, as the new rule imposed a lengthy two-year holding period. Liquidity improved as a result of 1983 and 1990 amendments, before the holding period was halved in the 1997 "big bang" amendment.  To read the entire article click here.