Ch 2 Deck 9 Flashcards
a purchase by a broker-dealer of a customer’s securities, with an agreement that the customer will purchase securities in a fixed-price offering from the broker-dealer
“taken in trade”
Rule 2730 is part of a group of rules which prohibits the selling of shares
in a fixed price offering at a reduced price
Rule 2730 prevents a FINRA member who is participating in a fixed price offering
“from arranging the purchase of shares taken in trade from a customer as payment for securities purchased by the customer in the offering unless the securities taken in trade are purchased at a price no higher than their fair market price.”
Taken in trade transactions must be recorded and the records kept
24 months
put into place to try to deter unfair manipulation of the price of stock in an offering—before, during or after a public offering
Regulation M
Regulation M is mostly aimed at
follow on offerings
Regulation M puts restrictions on those
in a position to unfairly manipulate price syndicate members market makers issuers affiliates of the issuers
What Regulation M tier is not easily manipulated
Tier 1
What Regulation M tier includes actively traded securities
Tier 1
Regulation M Tier 1 Public Float
more than $150M
Regulation M Tier 1 ADTV
$1M Average Daily Trading Volume
Regulation M Tier 1 restricted period
None
medium traded securities are Regulation M tier
2
Regulation M Tier 2 ADTV
$100,000
Regulation M Tier 2 public float
more than $25M
