Cal. Code Regs. Tit. 10, § 2682.12 - Exemption from Section 1104.3 of Certain Transactions Effected in Connection with Distribution
(a) Any transaction of purchase and sale, or
sale and purchase, of a security which is effected in connection with the
distribution of a substantial block of securities shall be exempt from the
provisions of Section
1104.3 to the extent specified in
this section as not comprehended within the purpose of said section, upon the
following conditions:
(1) The person effecting
the transaction is engaged in the business of distributing securities and is
participating in good faith, in the ordinary course of such business, in the
distribution of such block of securities;
(2) The security involved in the transaction
is
(A) a part of such block of securities and
is acquired by the person effecting the transaction, with a view to the
distribution thereof, from the insurer or other person on whose behalf such
securities are being distributed or from a person who is participating in good
faith in the distribution of such block of securities or
(B) a security purchased in good faith by or
for the account of the person effecting the transaction for the purpose of
stabilizing the market price of securities of the class being distributed or to
cover an over-allotment or other short position created in connection with such
distribution; and
(3)
Other persons not within the purview of Section
1104.3 are participating in the
distribution of such block of securities on terms at least as favorable as
those on which such person is participating and to an extent at least equal to
the aggregate participation of all persons exempted from the provisions of
Section 1104.3 by this section. However,
the performance of the functions of manager of a distributing group and the
receipt of a bona fide payment for performing such functions shall not preclude
an exemption which would otherwise be available under this
section.
(b) The
exemption of a transaction pursuant to this section with respect to the
participation therein of one party thereto shall not render such transaction
exempt with respect to participation of any other party therein unless such
other party also meets these conditions of this section.
Notes
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