Rule 144 Manner of Sale Requirements: 2026 Practitioner Walkthrough

If you are an affiliate planning to sell restricted or control securities, the manner of sale requirement is the condition most likely to trip you up. The CFR text is dense, your broker may not fully understand the solicitation prohibition, and most plain-language guides reduce this condition to a single bullet point. This walkthrough gives you the operational depth you actually need.

Key takeaway: The manner of sale requirement under Rule 144(f) applies only to affiliates selling equity securities. Non-affiliates are entirely exempt. Get the channel wrong, or let your broker solicit a buyer, and the entire safe harbor collapses.

For a full picture of all five Rule 144 conditions, see Rule 144 Resale Conditions: 2026 Practitioner Walkthrough. This article goes deep on manner of sale alone.

Does the Manner of Sale Requirement Apply to You?

The manner of sale requirement applies exclusively to affiliates selling equity securities. If you are a non-affiliate who has satisfied the applicable holding period, you can skip this condition entirely.

Under 17 CFR § 230.144(b)(1), non-affiliates of reporting companies who have held restricted securities for at least one year face zero Rule 144 conditions, including no manner of sale requirement, per the 2008 amendments. Non-affiliates between six months and one year must satisfy only the current public information condition.

Affiliates, by contrast, must satisfy manner of sale regardless of how long they have held the securities. This applies whether the securities are restricted (acquired privately) or control securities (freely tradeable shares held by virtue of affiliate status). An executive holding registered shares received under an S-8 plan is still an affiliate, and those shares are still control securities subject to Rule 144(f) when sold.

For a side-by-side breakdown of affiliate vs. non-affiliate obligations, see Rule 144 Affiliate vs Non-Affiliate: The 2026 Comparison.

The Two Permitted Sale Channels Under Rule 144(f)

Affiliates selling equity securities under Rule 144 must use one of exactly two channels: a brokers' transaction or a direct transaction with a market maker. No other execution method qualifies for the safe harbor.

Rule 144(f)(1) states the sale must be made:

• (A) In a brokers' transaction within the meaning of Section 4(a)(4) of the Securities Act, or
• (B) Directly with a market maker as defined in Section 3(a)(38) of the Securities Exchange Act of 1934.

A third option exists for sales to qualified institutional buyers, discussed below.

Channel A: Brokers' Transactions

This is the channel most affiliates use. The broker routes the sell order to the open market on your behalf as agent. The key constraints come from Rule 144(g), which defines what a brokers' transaction actually means in this context:

1. The broker executes the sell order as agent only and receives no more than the usual and customary commission.
2. The broker does not solicit or arrange for the solicitation of customers' orders to buy the securities in anticipation of or in connection with the transaction.
3. The broker is not aware of circumstances indicating the seller is an underwriter or that the transaction is part of a distribution.

All three conditions must be satisfied simultaneously.

Channel B: Direct Sale to a Market Maker

A market maker under Section 3(a)(38) of the Exchange Act is a dealer who holds itself out as willing to buy and sell a given security for its own account on a regular or continuous basis. When you sell directly to a market maker, the market maker buys as principal, not as your agent. This is a structurally different transaction from a brokers' transaction.

When would you use this route? Primarily when you want a guaranteed execution price and immediate liquidity, and the market maker is willing to take the other side. The market maker channel is common for thinly traded securities where finding a natural buyer through a broker takes time. The commission structure differs too: the market maker earns a spread rather than a brokerage commission, and the Rule 144(g) solicitation rules do not apply because there is no broker acting as agent.

What the Solicitation Prohibition Actually Means in Practice

The solicitation prohibition in Rule 144(g)(2) is the single most operationally sensitive element of the manner of sale requirement, and the one most commonly misunderstood.

The broker cannot solicit buy orders "in anticipation of or in connection with" the Rule 144 sale. This language is broader than it looks.

What the Broker Cannot Do

• Canvas potential buyers before or during the sale to gauge interest in purchasing your shares.
• Publish research specifically timed to facilitate demand for the sale.
• Pre-identify a block buyer and arrange a matched trade before placing the sell order.
• Contact institutional investors to discuss the availability of your shares.

These activities are routine in registered secondary offerings. In a Rule 144 brokers' transaction, they are impermissible. The moment a broker pre-arranges a buyer, the transaction starts to look like a distribution, which is exactly what Rule 144 is designed to prevent.

What the Broker Can Do

• Execute a sell order on the open market through normal exchange mechanisms.
• Respond to an unsolicited inquiry from a buyer who independently contacts the broker.
• Provide general market color to clients that is not specifically tied to facilitating your sale.

Practical Instruction to Your Broker

Before placing a Rule 144 sell order, instruct your broker in writing that the transaction must comply with Rule 144(g), that the broker must act as agent only, charge no more than the usual commission, and must not solicit buy orders in connection with the sale. Many compliance teams use a standard Rule 144 instruction letter for this purpose. Keep a copy.

What Happens If the Broker Inadvertently Solicits?

If a broker solicits a buyer, the transaction loses its Rule 144 safe harbor protection. The sale may then constitute an unregistered distribution, exposing both the seller and the broker to Securities Act liability. There is no cure provision in the rule. The SEC has brought enforcement actions in exactly this scenario, where broker conduct converted a styled Rule 144 transaction into an unregistered distribution.

If you discover a solicitation occurred before the trade settles, consult securities counsel immediately. Options may include unwinding the transaction or seeking an alternative exemption, but neither path is clean.

The QIB Carve-Out Under Rule 144(f)(3)

Rule 144(f)(3) provides a targeted exemption: the manner of sale requirement does not apply to sales made directly to a qualified institutional buyer (QIB) as defined in Rule 144A.

A QIB is generally an institution that owns and invests at least $100 million in securities of non-affiliated issuers. Think large pension funds, insurance companies, registered investment companies, and broker-dealers meeting the threshold.

This carve-out means an affiliate can sell a block of shares directly to a QIB, bypassing both the broker channel and the market maker channel, without violating Rule 144(f). This is operationally significant for large block trades where finding a natural market buyer through a broker would be slow or market-moving.

Critical compliance point: the QIB carve-out waives only the manner of sale requirement. Every other applicable Rule 144 condition still applies:

Affiliates who believe the QIB carve-out eliminates all Rule 144 conditions are wrong, and that misunderstanding creates real exposure. The volume limits alone can be a binding constraint on a large block sale to a QIB.

Block Trades, Dark Pools, and Algorithmic Execution

This is the gap that almost no plain-language guide addresses. Institutional sellers routinely use block trades, dark pools, and algorithmic execution platforms. Whether these are Rule 144-compliant depends on how they are structured.

Block Trades

A block trade executed through a broker who acts as agent and does not pre-identify or solicit the buyer can qualify as a brokers' transaction under Rule 144(g). The problem is that many block trades are pre-arranged: the broker identifies a buyer, negotiates a price, and then executes. That pre-arrangement is solicitation, and it disqualifies the transaction from the Rule 144 safe harbor.

The cleaner path for a large block sale is the QIB carve-out under Rule 144(f)(3): sell directly to a QIB, satisfy all other Rule 144 conditions, and avoid the manner of sale constraint entirely.

Dark Pools

Dark pool execution through a broker acting as agent, where the broker does not solicit specific buyers, can be consistent with a Rule 144 brokers' transaction. The broker is matching orders anonymously, not canvassing buyers. However, if the dark pool operator or broker takes steps specifically to find a buyer for your shares, that crosses into solicitation territory. Get written confirmation from your broker about how the execution will be handled before routing a Rule 144 sale through a dark pool.

Algorithmic Execution

Algorithmic execution (VWAP, TWAP, participation algorithms) through a broker acting as agent is generally consistent with Rule 144(g). The algorithm is executing against existing market orders, not soliciting new buyers. This is one of the cleaner execution methods for affiliates selling under Rule 144, provided the broker is acting as agent and the commission is within normal range.

How Manner of Sale Interacts with Volume Limits and Form 144 Timing

These three conditions operate together, and sequencing errors are common.

Volume Limits (Rule 144(e))

Affiliates may sell, in any three-month period, no more than the greater of:

• 1% of the outstanding shares of the class being sold, or
• The average weekly reported trading volume during the four calendar weeks preceding the filing of Form 144 (or, if no Form 144 is required, the date of receipt of the order).

For a company with 1,000,000 shares outstanding and average weekly trading volume of 15,000 shares, the cap is 15,000 shares (the trading volume figure exceeds the 1% = 10,000 share alternative).

The manner of sale and volume limit conditions are cumulative. You must satisfy both simultaneously. A sale that is executed through a compliant brokers' transaction but exceeds the volume cap is not protected by the safe harbor.

The Aggregation Trap

For volume limit purposes, Rule 144(a)(2) defines "person" broadly. Sales by the following are aggregated with yours:

• Relatives or a spouse sharing the same home.
• Trusts or estates in which you or covered relatives collectively hold 10% or more of the beneficial interest, or in which any of you serve as trustee or executor.
• Corporations or organizations in which you or covered relatives beneficially own 10% or more of any class of equity or 10% or more of the equity interest.

A CFO and their spouse selling through separate brokers on the same day must count both sales against the same volume cap. A CFO who also controls a family trust holding shares must aggregate the trust's sales too. Compliance teams should map the full "person" definition before calculating available volume.

For a detailed volume limit walkthrough, see Rule 144 Volume Limitations: A 2026 Practitioner Walkthrough.

Form 144 Timing

Form 144 must be filed concurrently with or before the placement of the sell order with the broker. Not after execution. Not after settlement. At or before the order is placed.

The form requires disclosure of:

• The number of shares to be sold.
• The manner of sale (the channel you are using under Rule 144(f)).
• The market on which the securities will be sold.
• The broker through whom the sale will be effected.

The manner of sale disclosure on Form 144 is directly linked to Rule 144(f). If you plan to sell through a brokers' transaction, say so. If you plan to sell to a QIB, say so. Inconsistency between the Form 144 disclosure and the actual execution creates compliance risk.

Form 144 is required when an affiliate intends to sell more than 5,000 shares or securities with an aggregate sale price exceeding $50,000 in any three-month period, per SEC guidance.

Effective April 13, 2023, Form 144 must be filed electronically on EDGAR for securities of reporting companies, per SEC Release No. 33-11070. Paper filing is no longer an option for reporting-company securities. Non-reporting company securities may still be filed on paper. Many brokers will prepare and submit the form on the seller's behalf, but the obligation to file on time rests with the seller. Confirm your broker's process before assuming it is handled.

For step-by-step Form 144 filing instructions, see Form 144 SEC Filing Instructions: 2026 Practitioner Walkthrough.

The Anti-Evasion Limit on the Safe Harbor

Rule 144 is a safe harbor, not a loophole. Preliminary Note 6 to Rule 144 states:

"The Rule 144 safe harbor is not available to any person with respect to any transaction or series of transactions that, although in technical compliance with Rule 144, is part of a plan or scheme to evade the registration requirements of the Act."

In practice, this means structuring a series of small broker transactions to stay under the volume cap while informally coordinating with buyers through back channels could still constitute an unregistered distribution. Technical compliance with each individual condition does not save a transaction that is, in substance, a coordinated distribution.

Manner of Sale Compliance Checklist for Affiliates

Before placing a Rule 144 sell order, work through this sequence:

1. Confirm affiliate status. Are you currently an affiliate, or were you an affiliate within the past 90 days? If yes, manner of sale applies.
2. Confirm equity securities. Manner of sale applies only to equity securities. Debt securities sold by affiliates are not subject to Rule 144(f).
3. Choose your channel. Brokers' transaction, direct sale to a market maker, or direct sale to a QIB under Rule 144(f)(3).
4. If using a broker: instruct the broker in writing to act as agent only, charge no more than the usual commission, and not solicit buy orders in connection with the sale.
5. Calculate your volume cap. Run the Rule 144(e) calculation, aggregate all sales by affiliated persons, and confirm the planned sale fits within the three-month cap.
6. Confirm current public information. The issuer must be current in its SEC periodic reports. A delinquent 10-K or 10-Q voids the safe harbor.
7. Confirm the holding period for any restricted securities being sold. Six months for reporting-company securities, one year for non-reporting-company securities.
8. File Form 144 on EDGAR at or before placing the sell order, if the sale exceeds 5,000 shares or $50,000 in a three-month period. Disclose the manner of sale accurately.
9. Arrange legend removal for restricted securities through the transfer agent, with a legal opinion letter confirming Rule 144 compliance. The manner of sale condition must be satisfied at the time of the actual sale, not at legend removal.
10. Document everything. Keep the broker instruction letter, the Form 144 filing confirmation, and the volume calculation. If the SEC inquires, you need the paper trail.

FAQ

Does the manner of sale requirement apply to non-affiliates? No. Non-affiliates are entirely exempt from Rule 144(f). Once a non-affiliate satisfies the applicable holding period, they can sell through any channel without restriction on manner of sale.

Can I sell Rule 144 shares through a 10b5-1 plan? Yes. A properly adopted 10b5-1 plan can be used to execute Rule 144 sales, provided the plan's execution instructions are consistent with the brokers' transaction requirements of Rule 144(g). The plan cannot pre-arrange specific buyers.

Does the manner of sale requirement apply to debt securities? No. Rule 144(f) is limited to equity securities. The 2008 amendments eliminated manner of sale requirements for affiliate sales of debt securities entirely.

What if I want to sell to a single institutional buyer without going through a broker? If that buyer is a QIB, use the Rule 144(f)(3) carve-out. All other Rule 144 conditions (holding period, volume limits, current public information, Form 144) still apply. If the buyer is not a QIB, you must use a brokers' transaction or market maker channel.

How do I know if my broker's execution method constitutes solicitation? Ask your broker in writing to confirm that no solicitation of buy orders will occur in connection with the sale, and to describe the execution method. If the broker cannot confirm this, or if the execution involves pre-identifying a specific buyer, the transaction may not qualify as a brokers' transaction under Rule 144(g).

What is the current Form 144 filing requirement for 2026? For securities of reporting companies, Form 144 must be filed electronically on EDGAR, effective April 13, 2023. The form must be filed at or before placement of the sell order. Sales of non-reporting company securities may still be filed on paper.