Trading large blocks of stock is one of the most important aspects of managing a company's institutional ownership base. Matching a large block of stock available for sale with the right buyer, such as a long-term holder of small cap stocks, can provide a great deal of stability and future support for the stock. On the other hand, a large seller forced to liquidate a position in the open market can create downward pressure on the share price and create overhang on the stock.

Stonegate specializes in moving large blocks of stock. Unless the shares have previously been registered, we find that the best method of moving a block is in a privately negotiated sale transaction. This avoids the disadvantages of a follow-on secondary offering in cost, time and impact on stock price, and the process is very similar to a PIPE. In a private sale of unregistered stock, the buyers purchase restricted stock from the seller under the terms of a stock purchase agreement. Because the restriction is not removed in the process, the transaction is not subject to the volume and solicitation restrictions associated with Rule 144. For an affiliate of the issuer, or any other large shareholder in an illiquid company, this process can be a very quick and easy way of selling a large block without the need to file a registration statement. As with a private placement for an issuer, the buyers of stock in a private sale from an affiliate typically require and receive some form of registration rights agreement which insures that they will eventually get their shares registered. These are typically filed within 30 days of the completion of the stock sale.