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Rule 144A, adopted pursuant to the U.S. Securities Act of 1933, as amended (the “Securities Act”) provides a safe harbor from the registration requirements of the Securities Act of 1933 for certain private resales of restricted securities to Qualified Institutional Buyers (QIBs), which generally are large institutional investors with over $100 million in investable assets. When a broker or dealer is selling securities such as aor debenture, in reliance on Rule 144A, it is subject to the condition that it may not make offers to individuals other than those it reasonably believes to be Qualified Institutional Buyers.
Since its adoption, Rule 144A has greatly increased the liquidity of the securities affected. This is because the institutions can now trade these formerly restricted securities amongst themselves, thereby eliminating the restrictions that are imposed to protect the public. Rule 144A was introduced in order to attract foreign companies to sell securities in the United States capital markets. For firms registered with the SEC or a foreign company providing information to the SEC, financial statements do not need to be provided to buyers. Rule 144A has become the principal safe harbor on which non-U.S. companies rely when accessing the U.S. capital markets.
Since 1990, the Nasdaq Stock Market offers a compliance review process which grants Depository Trust & Clearing Corporation (DTCC) book-entry access to 144A securities. Nasdaq also hopes to launch an Electronic Trading Platform for 144A securities in late 2007 and has a pending Rule Filing with the SEC.
Rule 144A can often be confused with rule 133, which was also established by the SEC under the 1933 Act. Rule144 permits, under limited circumstances, the sale of restricted and controlled securities without registration.
CUSIP is the universally accepted standard for uniquely classifying financial instruments across exchanges and institutions worldwide. The CUSIP system provides identification and descriptive information for nearly 8.5 million financial instruments. The CUSIP system helps to support accurate and efficient clearance and settlement, and processing of income payments throughout the life cycle of a financial instrument.
The 144A Service links related issues from the same private placement memorandum offering document ( or OM). Based on the type of investor allowed to purchase these securities, CUSIPs are assigned for each type of qualified institutional buyer that can purchase a part of the offering.
• Links related securities from the same private offering memorandum.
• Provides CUSIP numbers for 144A, Accredited Investor, and Registered issues; CINS* for Regulation S issues.
• Identifies groups of securities based on qualified investor type.
* CUSIP International Numbering System
Linked CUSIPs Include:
• 144A- Securities that can be traded among institutions at any time eliminating Rule 144’s two-year lock up period, without having to register with the U. S. Securities & Exchange Commission (SEC).
• Accredit Investor- Purchasers of privately placed securities issued pursuant to Regulation D.
• Registered Issues - Securities publicly registered with the SEC that were previously offered in a usually with registration rights.
• Regulation S- Securities that are available for offer and sale outside the United States and not registered with the Securities & Exchange Commission (SEC).
The 144A Service is initialized with a Master File of active 144A securities that are linked to other CUSIPs from the same offering document.
For PPM.net’s 144A Services, please Contact Us.