Rule 144 Volume Limitations: Calculation, Aggregation, and Form 144

Under Rule 144’s volume limitations, an affiliate selling an issuer’s equity securities cannot sell more than the greater of 1% of the shares outstanding or the average weekly trading volume over the four calendar weeks preceding the sale, measured across any rolling three-month period.¹ Every sale by the affiliate counts against that ceiling, and so do sales by household relatives and anyone acting in concert with the seller. Miscalculating the cap strips the safe harbor that keeps the sale legal under Section 5 of the Securities Act.

Who the Volume Cap Applies To

The cap binds affiliates, sometimes called control persons. An affiliate is anyone who can direct the management or policies of the issuer, whether through voting shares, a board seat, or a contractual arrangement.² That typically pulls in executive officers, directors, and large shareholders.

Non-affiliates holding restricted securities face a holding period, but once it runs out the volume cap and most other Rule 144 conditions fall away entirely.¹ Affiliates stay inside the volume regime for as long as they hold affiliate status, no matter how long they have owned the shares.

How to Calculate the Cap

For equity securities such as common and preferred stock, you compute two figures and take the higher one as your ceiling for the three-month period.¹

One percent of outstanding shares. Take the total shares of that class currently outstanding, as shown in the issuer’s most recent public filing, and calculate 1%. A company with 10 million shares outstanding gives a 100,000-share ceiling.
Average weekly trading volume. Add the total reported trading volume for the four calendar weeks immediately before the Form 144 filing date (or, if no filing is required, before the broker receives the sell order), then divide by four.³

A worked example. Suppose a company has 20 million shares outstanding and its stock traded 500,000 shares over the past four weeks. The 1% figure is 200,000 shares. The average weekly volume is 125,000 shares. Your ceiling is 200,000. For a thinly traded stock the math often flips, and the trading-volume figure becomes the higher of the two.

OTC and Unlisted Securities

If the stock trades over the counter rather than on a national exchange, only the 1% measurement is available. The trading-volume alternative does not apply to OTC securities, including those quoted on the OTC Bulletin Board or Pink Sheets.¹ For affiliates of smaller companies with modest share counts, this can shrink the ceiling considerably.

Debt Securities

Bonds and other debt instruments use different math. The volume limit for debt securities is the greater of the equity-security limit above or 10% of the principal amount of the tranche being sold, combined with all other sales from the same tranche by that person during the preceding three months.² The 10% floor lets affiliates move debt in meaningful blocks.

The Rolling Three-Month Window

The cap runs on a rolling 90-day window rather than a fixed calendar quarter. Each time you sell, look back 90 days and add every sale made during that stretch. If the running total plus the new sale would exceed the calculated ceiling, the sale breaks the safe harbor.²

Unused room does not carry over. If your cap allowed 100,000 shares and you sold 20,000, the remaining 80,000 disappears when those earlier sales roll off the 90-day window. Each new sale recalculates the ceiling from scratch, using the current outstanding-share count and the most recent four-week trading volume. Bunching sales too close together can lock you out for weeks.

Whose Sales Get Combined With Yours

Rule 144 blocks affiliates from splitting shares among friends or relatives to multiply their allowances. Several aggregation rules treat multiple sellers as a single person for volume-cap purposes.

Household Relatives and Family-Controlled Entities

Any relative or spouse living in the affiliate’s household is treated as part of the same person.² The same applies to any trust, estate, or corporation in which the affiliate and those household relatives collectively own 10% or more of the beneficial interest or equity. If a CEO’s spouse sells shares of the same issuer through a family trust, those sales come out of the CEO’s allowance too. This is one of the most commonly overlooked trip wires in Rule 144.

Acting in Concert

When two or more affiliates or other persons agree to act together to sell an issuer’s securities, all their sales of the same class during any three-month period are added together against a single volume limit.² No written agreement is needed. The SEC looks at whether the parties coordinated their timing or strategy, even informally.

Gifts and Pledges

If an affiliate gives shares as a gift, the donor and every donee must aggregate their sales for one year from the date of the gift. When a first donee who is also an affiliate passes shares to a second donee, those two donees aggregate for one year from the second gift.⁴ For pledged securities, when a pledgor defaults each pledgee may sell up to the Rule 144 limit reduced by any sales the pledgor made during the same period. Pledgees generally do not aggregate with each other unless there is a separate basis for doing so.

Filing Form 144

Affiliates must file a Form 144 Notice of Proposed Sale with the SEC when a sale involves more than 5,000 shares or the total dollar amount exceeds $50,000 in any three-month period.¹ Sales under both thresholds do not require a filing, though the volume cap itself still applies.

The form requires the issuer’s name, the seller’s name, the number of shares to be sold, the broker handling the trade, and the date the securities were originally acquired.⁵ It must be submitted at the same time the sell order is placed with the broker or the trade is executed. If the sale does not occur within 90 days after filing, a new Form 144 is required.

Filing goes through EDGAR electronically when the issuer is subject to Exchange Act reporting.⁶ If the issuer is not a reporting company, a paper form is permitted.⁷ To file electronically you need a Login.gov account, a Central Index Key (CIK) assigned by EDGAR, and a CIK Confirmation Code (CCC), plus the issuer’s own CIK to link the filing to the right company.⁸ Setting up those credentials for the first time can take a few business days, so start well before the intended sale date. Once filed, the Form 144 becomes a public record on EDGAR.

What Happens If You Exceed the Cap

Selling beyond the volume limit costs you the safe harbor. Without it, the sale can be treated as an unregistered distribution under Section 5 of the Securities Act, exposing the seller to SEC enforcement and potential rescission claims from buyers. Rule 144 is not the only exemption available, and a seller outside its boundaries may still qualify under another one.² Falling back on another exemption after the fact is a precarious position. The safer path is to run the calculation carefully, count sales by household relatives and any coordinated sellers, and file Form 144 on time.

One boundary worth flagging: staying inside the volume cap does not by itself complete Rule 144 compliance. Affiliates must also meet the applicable holding period for restricted securities, ensure the issuer is current on its SEC filings, and route equity sales through a broker’s transaction or a market maker without soliciting buyers.² The volume math is the piece most affiliates get wrong, but it is one condition among several.

1
U.S. Securities and Exchange Commission. Rule 144: Selling Restricted and Control Securities
2
eCFR. 17 CFR 230.144 – Persons Deemed Not to Be Engaged in a Distribution and Therefore Not Underwriters
3
eCFR. 17 CFR 230.144 – Persons Deemed Not to Be Engaged in a Distribution and Therefore Not Underwriters
4
U.S. Securities and Exchange Commission. Rule 144 – Persons Deemed Not to Be Engaged in a Distribution and Therefore Not Underwriters
5
eCFR. 17 CFR 239.144
6
U.S. Securities and Exchange Commission. Updating EDGAR Filing Requirements and Form 144 Filings
7
U.S. Securities and Exchange Commission. Form 144
8
U.S. Securities and Exchange Commission. How Do I File Form 144 Electronically?