Selling iConsumer stock privately

By: Robert Grosshandler | January 22, 2020

We’ve got a shareholder who is working through what it takes to sell his iConsumer stock without a stock broker or the public stock market in the picture. In other words, a “private” transaction.

iConsumer isn’t involved in the potential transaction, but we can certainly share what we’re learning about the process. As part of his effort he’s soliciting strangers – being his own stock broker.

Why sell privately?

There are many reasons somebody might want to sell without using a stock broker. In this case the seller isn’t located in the U.S., and finding a stock broker to handle a transaction in his country hasn’t worked out. Another reason I could see for selling privately is wanting to sell (or gift) your stock to a family member for estate planning purposes. Or you might have a very large holding. Selling a large block of stock via the stock market might take too long, or affect the price negatively.

One of the great things, I think, about owning stock in iConsumer, unlike owning stock in most startups, is that you are allowed to sell. There are no lockups or other restrictions that are common in the startup world.

Public vs. private sales

If you’re one of the 99% of iConsumer members who got stock because you earned it from shopping or invested money directly (which you can still do!), your stock was part of a public sale – governed by an Offering Circular. That’s the whole point of the public offering – to make it legal to sell RWRDP on the public stock market whenever you want to almost anybody you want. That goes for iConsumer, too. We were and are able to sell our stock to almost anybody, not just rich folk.

If you don’t want to sell it via a stock broker utilizing the public market and the public market rules (currently, we’re quoted on the OTC market), that’s your right. And that’s a “private” sale.

Insider Rules

FYI – There ARE lots of rules if you got our stock from us in a different way (early investors, for instance, who invested before we had an offering, or insiders like me.) We had to follow those rules when selling our stock initially. We also have to follow those rules if we want to sell our stock in a manner not covered by the offering. For instance, if we wanted to sell our stock for more or less than $.18/share, the private sale rules would be in force.

Insiders mostly have to worry about SEC Rule 144 if we want to sell our stock at any price. And the people who might buy stock directly from insiders inherit the Rule 144 restrictions. In a nutshell, the buyer of stock that is subject to Rule 144 can’t sell it on the public stock market for a minimum of 1 year.

For early investors, the one year holding period has passed, so they are free to sell their stock in the public stock market whenever they might like.

The “might getchas” in private sales

SEC stuff aside, there are a bunch of practical considerations to selling privately. First and foremost, if you’re buying our stock (or any stock) from a private seller, you want to make sure you get “good title”, have the appropriate paperwork that traces the origin of the ownership of the stock, and that you’ll be able to deposit the stock you buy with a stock broker, so that you can eventually sell it.

Which means you’re going to want to get legal advice. There is going to be a document – often called a Security Purchase Agreement, that outlines the rights and obligations of each party to the sale. The buyer and seller will want to execute that document.

The actual transfer between private parties is pretty easy. It’s simply a written instruction by the seller to the transfer agent (Issuer Direct), the payment of a fee ($25 currently), and a week or so.

Can iConsumer help with this?

No. Our lawyers would draw and quarter me. (Possibly literally.)

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