17 CFR 260.3(4)-3 - Definitions of

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§ 260.3(4)-3 Definitions of “participates” and “participation” as used in section 303(4), in relation to certain transactions.
(a) The terms participates and participation in section 303(4) shall not include the interest of a person (1) who is neither in privity of contract with the issuer nor affiliated with the issuer, and (2) who has no association with any principal underwriter of the securities being distributed, and (3) whose function in the distribution is confined to an undertaking to purchase all or some specified proportion of the securities remaining unsold after the lapse of some specified period of time, and (4) who purchases such securities for investment and not with a view to distribution.
(b) As used in this section:
(1) The term association shall include a relationship between two persons under which one (i) is affiliated with the other, or (ii) has, in common with the other, one or more partners, directors, officers, trustees, branch managers, or other persons occupying a similar status or performing similar functions or (iii) has a participation, direct or indirect, in the profits of the other, or has a financial stake, by debtor-creditor relationship, stock ownership, contract or otherwise, in the income or business of the other.
(2) The term principal underwriter means an underwriter in privity of contract with the issuer of the securities as to which he is underwriter.

Title 17 published on 2014-04-01

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