Are affiliated purchasers of the issuer, a selling security holder, or of a distribution participant permitted to purchase the issuers securities that are being distributed?
Yes. The definition of “completion of participation in a distribution” clarifies that affiliated purchasers of an issuer, a selling security holder, or of a distribution participant may purchase in the distribution, provided that the securities are acquired for investment purposes. However, consideration may need to be given to other requirements, depending on the nature of the offering or the extent of purchases. For example, disclosure in the registration statement may be necessary, if information regarding such purchases would be material to investors’ decision to buy in the offering. Also, affiliated purchasers must comply with the requirements under Exchange Act Rule 10b-9 if applicable to the offering and the Free-Riding and Withholding Interpretation, IM-2110-1 (Interpretation) contained in National Association of Securities Dealers, Inc.
Related Questions
- If an issuer purchases its securities before the Regulation M restricted period begins for the security in distribution, may the settlement of this trade occur during the restricted period without violating Regulation M?
- May a distribution participant (e.g., an underwriter) that is an affiliate of an issuer or selling security holder conduct passive market making in a covered security pursuant to Rule 103?
- If I’m selling privately, who prepares the Agreement of Purchase and Sale?
