What does Rule 144A allow?

Rule 144A is significant in the securities industry because it facilitates the sale of unregistered securities to Qualified Institutional Buyers (QIBs). This rule provides a safe harbor exemption from the registration requirements of the Securities Act of 1933, allowing private companies to sell their securities without the extensive registration process typically required for public offerings.

By focusing on QIBs, which are large institutional investors such as mutual funds, pension funds, insurance companies, and other similar entities, Rule 144A enables these investors to purchase securities that may not otherwise be accessible to them. This contributes to market liquidity and provides companies with greater access to capital while maintaining a level of investor protection, as QIBs are deemed to possess the financial sophistication to make informed investment decisions.

The other options pertain to different aspects of securities regulation or do not accurately describe the function of Rule 144A. For instance, registered securities and their issuance follow a different regulatory framework, while the holding period mentioned in another option refers to a separate rule concerning restricted securities. Finally, restricted securities cannot be generally offered to the public under Rule 144A, as this provision targets specific qualified institutional investors.