What has come to be known as a Section 4(1½) or Section 4(a)(1½) transaction is a private resale of restricted securities that technically relies on the Section 4(a)(1) registration exemption. The Section 4(1½) private resale exemption is not formally established by any written SEC rule or regulation. It has developed over time and is only discussed in case law. The Fixing America's Surface Transportation Act (Fast Act), enacted December 4, 2015, codifies a new exemption for certain resales of securities under Section 4(a)(7) of the Securities Act of 1933, as amended, which is similar in some respects to Section 4(1½) transactions.

Sellers that want to claim this resale exemption can sell to sophisticated investors (such as accredited investors) who would have been eligible to purchase the unregistered securities directly from an issuer, and must comply with the rules typically prescribed for Section 4(a)(2) (formerly Section 4(2)) or Regulation D private placements by issuers. Restrictions vary based on the issuer, the nature of the investors and the size of the offering.

For more information on Section 4(1½) resales, see Practice Note, Resales Under Rule 144A and Section "4(1½)".

For more information on Section 4(a)(2) and Regulation D private placements, see Practice Note, Section 4(a)(2) and Regulation D Private Placements.