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Regulation M Amendments Intended to Enhance Integrity, Fairness in Offering Process
Washington, DC, December 20, 2004 - The SEC has proposed amendments to Regulation M, which governs the activities of underwriters, issuers, selling security holders, and others in connection with offerings of securities.
The amendments proposed by the SEC would prohibit certain activities that could undermine the integrity and fairness of the offering process and would enhance the transparency of market activity.
Specifically, the SEC has proposed to:
- amend the definition of “restricted period” with respect to IPOs and to apply the definition to mergers, acquisitions, and exchange offers;
- amend the “de minimis exception” to require recordkeeping;
- update the average daily trading volume (ADTV) value and public float value qualifying thresholds;
- require disclosure of syndicate covering bids and to prohibit penalty bids;
- include reference securities in the exception for transactions in securities eligible for resale; and
- adopt a new rule to expressly prohibit issuers, underwriters, broker-dealers, and other distribution participants from accepting an offer from a prospective purchaser to pay additional consideration in order to obtain an allocation of offered shares.
The deadline for commenting on the proposed changes to Regulation M is February 15, 2005.
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