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?
Yes. The settlement may occur during the restricted period as long as the trade occurred outside the restricted period. Q: Rule 100 of Regulation M states that in the case of a merger, acquisition or exchange offer, a restricted period commences on the day proxy solicitations or offering materials are first disseminated to security holders. Is a restricted period triggered when a third party solicits proxies in opposition to a proposed merger on the basis of its proposed alternative to exchange its stock for the target company stock (alternative stock transaction)? A: In some cases, the answer is yes. “Distribution” is defined in Rule 100 as an “offering of securities . . . that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts.” The application of Regulation M to the opposition proxy solicitation involves an analysis of the three elements of a distribution: (1) is there an “offering of securities;” (2) does
Related Questions
- When is the price of an offered security "determined" for purposes of applying the Regulation M restricted period? Is the price determined when the underwriter and issuer orally agree on the price or when the underwriters formally contract to underwrite the offering, which may occur later?
- 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?
- Can a private placement of securities be a distribution under Regulation M?
