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NASD Amends Proposed Rule Change for "Hot" Equity Offerings
Washington, DC, December 18, 2000 - The National Association of Securities Dealers (NASD) has filed with the Securities and Exchange Commission Amendment No. 2 to a proposed rule change relating to the purchase and sale of initial equity public offerings. The new rule would replace the current Free-Riding and Withholding Interpretation, IM-2110-1. Comments on Amendment No. 2 are due to the SEC no later than December 26, 2000.
Based on comments received on the original proposal, NASDR amended the proposed rule change to restrict the purchase and sale of all initial equity public offerings (IPOs), not just those that open above a certain premium (or so-called "hot issues"). As a result of the proposal to apply the proposed rule change to all IPOs, NASDR is also proposing to exempt all secondary offerings.
Amendment No. 2 contains provisions to address circumstances where purchases by "restricted persons" are necessary for the successful completion of an offering. The proposed rule change continues to expressly exempt investment companies registered under the Investment Company Act from the categories of persons to whom member firms would be prohibited from selling new issues.
Finally, Amendment No. 2 permits a portfolio manager to invest in IPOs through a fund he or she manages; however, a portfolio manager may not purchase IPOs for his or her personal accounts.