Restricted Stocks Services
Charles Schwab is uniquely positioned to offer a wide variety of service options and benefits for restricted stockholders.
What are Restricted Stocks?
Restricted stock
Restricted stock is usually acquired in a private placement from the issuing company or from an "affiliate" of the issuer. It can also be acquired through a compensation package, bonus, or stock option plan. Restricted stock is not registered with the SEC. It can be sold only through the processing of the restricted stock certificate in accordance with whatever restrictions are placed on it. These restrictions are outlined on the securities certificate in what is called a legend.
Control stock
Control stock is held by an officer, a board member, or a shareholder owning more than 10% of outstanding shares. The issuers legal counsel makes the final determination of who qualifies as an "affiliate" or "control person." Although control stock certificates may not bear restrictive legends, they are subject to special SEC Rule 144 requirements.
Let Schwab handle your restricted stock transaction from start to finish.
Specialized support
Work with our dedicated Restricted Stock Department, where specialists ensure your transactions are seamless. In-person assistance is also available through your local Schwab Investor Center.
Trade with ease
Once approved, trade your restricted shares on Schwab.com with the convenience you expect from Schwab. Please note that online trades of restricted stock are subject to the broker-assisted commission rate ($25).
Guidance for SEC filings and trading plans
Schwab's specialists provide support for SEC Forms 3, 4, and 5 filings and help you set up and manage 10b5-1 trading plans. Our team handles the reporting and compliance details.
Competitive pricing
Enjoy quality restricted stock services at competitive rates. Our specialists are here to help with any fee-related questions.
Common questions
All restricted stock transactions at Schwab require paperwork. To determine your specific requirements, contact one of our Restricted Stock Specialists at 800-239-2506 from 9:00 a.m. to 6:00 p.m. ET, Monday through Friday.
Alternatively, consider visiting one of our branches. Our investment specialists will help you complete all the required forms on site and will forward them to our Restricted Stock Services. Locate an office.
NOTE: Because restricted and control stock transactions require special handling, approving your sale may require one week or longer, during which time the price of your restricted or control stock may fluctuate. Please keep in mind that Schwab is not responsible for market fluctuations while your transaction is being processed. In order to help Schwab expedite the processing of your sale, please promptly complete the necessary paperwork.
Key Types of Restricted and Control Stock Legends:
- 1933 Act, which indicates that the shares are unregistered and compliance with SEC Rule 144 or prospectus delivery may be required
- Affiliate, which identifies the shares as being owned by a control person
- Lockup, which restricts the sale of shares during a specified time period
- Prior Approval to Transfer, which requires an approval from the issuer prior to any sale
- Tax Withholding, which advises the holder that a sale prior to the date indicated, may result in special tax consequences
Key Rules for Restricted and Control Stock Sales:
The following section describes specific SEC rules that regulate most types of restricted and control stock.
You hold control stock, or have owned unregistered shares, fully paid, for six months.
Your transaction is regulated by SEC Rule 144, which permits you to sell your shares on the open market, provided there is adequate public information available about the company at the time of the sale.
For "affiliates" of the issuer, certain additional conditions must be met, including:
- The quantity of shares sold is within volume limitations
- SEC Form 144 must be filed to provide notification of proposed sales
You have owned unregistered shares, fully paid, for one year, and haven't been an "affiliate" of the issuer for at least three months.
Your transaction is regulated by SEC Rule 144(b)(1), which allows you to sell your shares without meeting many of the other resale conditions including the requirement that there be adequate public information available about the company at the time of sale. You may also remove your stock restrictions for future sale.
You own stock that was registered as part of a prospectus, which is filed with the SEC, after you acquired the shares.
You own "Shelf Registration" or "Prospectus" shares, which may only be sold by delivering a copy of the effective prospectus to the buyer, at the time of the sale.
Not yet a Schwab client?
Want to learn more?
Call our Restricted Stock Specialists at 800-239-2506 from 9:00 a.m. to 6:00 p.m. ET, Monday through Friday.