Current through Register Vol. XLI, No. 38, September 20, 2024
5.1. Exemption of certain securities from
subsection (c) of the Act. -- Any security shall be exempt from the operation of
subsection (c) of the Act to the extent necessary to render lawful under such
subsection the execution by a broker of an order for an account in which he has no
direct or indirect interest.
5.2.
Exemption from subsection (c) of the Act of certain transactions effected in
connection with a distribution.
Any security shall be exempt from the operation of subsection (c)
of the Act to the extent necessary to render lawful under such section any sale made
by or on behalf of a dealer in connection with a distribution of a substantial block
of securities, upon the following conditions:
(a) The sale is represented by an over-allotment
in which the dealer is participating as a member of an underwriting group, or dealer
or person acting on his behalf intends in good faith to offset such sale with a
security to be acquired by or on behalf of the dealer as a participant in an
underwriting, selling or soliciting-dealer group of which the dealer is a member at
the time of sale, whether or not the security to be so acquired is subject to a
prior offering to existing security holders or some other class of persons;
and
(b) Other persons not within the
purview of subsection (c) of the Act are participating in the distribution of such
block of securities on terms at least as favorable as those on which such dealer is
participating and to an extent at least equal to the aggregate participation of all
persons exempted from the provisions of subsection (c) of the Act by Section 5.2 of
these rules. 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 Section 5.2 of these
rules.
5.3. Exemption from
subsection (c) of the Act of sales of securities to be acquired.
(a) Whenever any person is entitled, as an
incident to his ownership of an issued security and without the payment of
consideration, to receive another security "When Issued" or "When Distributed," the
security to be acquired shall be exempt from the operation of subsection (c):
Provided, That
(1) The sale is made
subject to the same conditions as those attaching to the right of acquisition;
and
(2) Such person exercises reasonable
diligence to deliver such security to the purchaser promptly after his right of
acquisition matures; and
(3) Such person
reports the sale on the appropriate form for reporting transactions by persons
subject to subsection (a) of the Act.
(b) This section shall not be construed as
exempting transactions involving both a sale of a security "When Issued" or "When
Distributed" and a sale of the security by virtue of which the seller expects to
receive the "When-Issued" or "When-Distributed" security, if the two (2)
transactions combined result in a sale of more units than the aggregate of those
owned by the seller plus those to be received by him pursuant to his right of
acquisition.
