Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Any
transaction of purchase and sale, or sale and purchase, of a security which is
effected in connection with the distribution of a substantial block of securities
shall be exempt from the provisions of Section 1104.3 to the extent specified in
this section as not comprehended within the purpose of said section, upon the
following conditions:
(1) The person effecting the
transaction is engaged in the business of distributing securities and is
participating in good faith, in the ordinary course of such business, in the
distribution of such block of securities;
(2) The security involved in the transaction is
(A) a part of such block of securities and is
acquired by the person effecting the transaction, with a view to the distribution
thereof, from the insurer or other person on whose behalf such securities are being
distributed or from a person who is participating in good faith in the distribution
of such block of securities or
(B) a
security purchased in good faith by or for the account of the person effecting the
transaction for the purpose of stabilizing the market price of securities of the
class being distributed or to cover an over-allotment or other short position
created in connection with such distribution; and
(3) Other persons not within the purview of
Section 1104.3 are participating in the distribution of such block of securities on
terms at least as favorable as those on which such person is participating and to an
extent at least equal to the aggregate participation of all persons exempted from
the provisions of Section 1104.3 by this section. However, the performance of the
functions of manager of a distributing group and the receipt of a bona fide payment
for performing such functions shall not preclude an exemption which would otherwise
be available under this section.
(b) The exemption of a transaction pursuant to
this section with respect to the participation therein of one party thereto shall
not render such transaction exempt with respect to participation of any other party
therein unless such other party also meets these conditions of this
section.
