Section 4(a)(7) Exemption for Private Resales of Restricted Securities

Summary

This practice note discusses the statutory exemption from registration for unregistered resales of securities provided by Section 4(a)(7) of the Securities Act of 1933, as amended (Securities Act). Section 4(a)(7) (15 U.S.C. § 77d(a)(7)) was added to the Securities Act in December 2015 by the Fixing America's Surface Transportation (FAST) Act, a statute intended primarily to provide funding for infrastructure repairs. Section 4(a)(7), in essence, attempts to codify certain aspects of the so-called "Section 4(a)(1½) exemption," a long-standing set of principles developed over many years from informal guidance from the Securities and Exchange Commission (SEC) and caselaw to exempt resales of securities in private transactions.