Definition of Gypsy Swaps
In the context of Regulation D.A private purchaser wishes to invest directly in an issuer but hopes toacquire unrestricted securities. Through arrangements and understandings with theissuer, a stockholder with shares that are either restricted securities currentlyeligible for sale under Rule 144 or unrestricted securities sells the shares to theprivate purchaser. At about the same time, the issuer sells an equivalent number ofshares to the stockholder. The Securities & Exchange Commission's view is that the shares taken by the privatepurchaser from the stockholder will be restricted securities within the meaning ofRule 144(a)(3). The holding period will date to the private acquisition. A public resaleof the shares acquired from the stockholder without regard to the conditions of Rule 144 would raise serious issues under Section 5 of the Securities Act for all parties tothe transactions.