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CHAPTER 3

Control and Restricted Stock Opportunities

As a key employee in your company, you may have been awarded restricted or control stock. While such a reward is beneficial and offers opportunities, it can have certain limitations. Chances are these securities account for much of your wealth, and they need to be managed in the context of your bigger financial picture.

Control Securities
Control stock is owned by individuals or entities who directly or indirectly control the management of the issuer — typically, senior officers, directors and certain large shareholders — often referred to as “affiliates.” Keep in mind that it is the security holder’s ability to control the company, not how the stock was acquired, that determines whether the securities are control securities.

Restricted Securities 
Restricted securities are acquired in an unregistered transaction, obtained from a company in a private transaction or received as compensation for services. If you have restricted stock, it will usually have a “legend” stamped on the stock certificate indicating that the stock is not registered for public sale.

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