D.C. Mun. Regs. tit. 26, r. 26-A1411

Current through Register 71, No. 45, November 7, 2024

Rule 26-A1411 - EXEMPTION FROM SECTION 3(B) OF CERTAIN TRANSACTIONS EFFECTED IN CONNECTION WITH A DISTRIBUTION

1411.1

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 3(b) of the Act, to the extent specified in this section as not comprehended within the purpose of the Act, upon the following conditions:

(a) The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of business, in the distribution of a block of securities;

(b) The security involved in the transaction is as follows:

(1) A part of a block of securities and is acquired by the person effecting the transaction, with a view to the distribution, from the insurer or other person on whose behalf the securities are being distributed or from a person who is participating in good faith in the distribution of the block of securities; or

(2) 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 the distribution; and

(c) Other persons not within the purview of Section 3(b) of the Act are participating in the distribution of the block of securities on terms at least as favorable as those on which the person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of Section 3(b) of the Act by this section. However, the performance of the functions of manager of a distributing group and the receipt of a distributing group and the receipt of a bona fide payment for performing the functions shall not preclude an exemption which shall otherwise be available under this section.

1411.2

The exemption of a transaction pursuant to this section with respect to the participation of one party shall not render the transaction exempt with respect to participation of any other party unless the other party also meets the conditions of this section.

D.C. Mun. Regs. tit. 26, r. 26-A1411