A “restricted security”, defined in Rule 144(a)(1), is, for practical purposes, a security which you purchase directly from the issuing company or an affiliate of the issuing company in a private offering. You may also purchase a restricted security from one or a series of predecessor holders (in a “chain of transactions”), the first of whom purchased it directly from the issuing company or an affiliate of the issuing company in a private offering when none of the intervening transactions involved a public offering. Securities include common and preferred stock, debt securities (but not all debt is a security), options and warrants. Common stock is generally the only security of an issuing company that is traded in the open market, and is therefore the focus of Rule 144 opinions. And, it is the common stock received upon conversion of or in exchange for a debt security, or upon exercise of an option or warrant that retains its restricted character derived from the character of the original security. The certificates or instruments for restricted securities are usually stamped with or have a printed notice a notice or legend of the restrictions. As a rule of thumb, any security which has not been purchased in the public securities market is a “restricted security”, even though the certificate or instrument does not have a restrictive legend. The only effective means to “cleans” a restricted security and make it “free trading” (actually, a misnomer because the Securities Act looks at each transaction for an available exemption) is to sell it into the public securities market.