Series 14: 6.1.7.1. Regulation M, Rules 101 And 102—Purchasing During Restricted Periods

6.1.7.1. Regulation M, Rules 101 and 102—Purchasing During Restricted Periods

Rule 101 forbids underwriters and their affiliates from purchasing or inducing someone else to purchase a covered security during a restricted period in connection with a public offering. Rule 102 prohibits this activity by issuers and their affiliates.

A covered security is any security that is governed by federal regulations or describes any security authorized to be listed on an exchange. A restricted period is the period beginning up to five days prior to the pricing of a new issue and ending once the public offering is completed. Regulation M applies principally to new issues of securities that are already traded in the secondary market.

Restricted periods vary depending on the size an