Securities Act 1933
An affiliate of XYZ Corporation wants to sell restricted stock under Rule 144. XYZ has average weekly trading volume of 50,000 shares and 2,000,000 shares outstanding. What is the maximum number of shares the affiliate can sell in a 90-day period?
Rule 144 volume: GREATER of 1% outstanding OR average weekly volume (90-day period).
Complete Analysis & Legal Rationale
Under Rule 144, the volume limit is the greater of: (1) 1% of outstanding shares (2,000,000 x 1% = 20,000), or (2) average weekly trading volume (50,000). Since 50,000 is greater than 20,000, the affiliate can sell up to 50,000 shares in a 90-day period.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Matches the verified teaching point in the explanation.
20,000 is 1% of outstanding shares, but weekly volume of 50,000 is greater.
200,000 exceeds both calculation methods and is not permitted.
12,500 appears to be a calculation error and does not follow Rule 144 formulas.
Official Standard: Primary offering registration/prospectus framework and exemptions (verify current text).
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.