Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 102 -- Activities by Issuers and Selling Security Holders During a Distribution

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1. Unlawful Activity. In connection with a distribution of securities effected by or on behalf of an issuer or selling security holder, it shall be unlawful for such person, or any affiliated purchaser of such person, directly or indirectly, to bid for, purchase, or attempt to induce any person to bid for or purchase, a covered security during the applicable restricted period; Except That if an affiliated purchaser is a distribution participant, such affiliated purchaser may comply with Rule 101, rather than this section.
   
   
2. Excepted Activity. The following activities shall not be prohibited by paragraph (a) of this section:
   
   
   1. Odd-lot transactions. Transactions in odd-lots, or transactions to offset odd-lots in connection with an odd-lot tender offer conducted pursuant to Rule 13e-4(h)(5) under the Securities Exchange Act of 1934; or
      
      
   2. Transactions by closed-end investment companies.
      
      
      1. Transactions complying with Rule 23c-3 under the Investment Company Act of 1940; or
         
         
      2. Periodic tender offers of securities, at net asset value, conducted pursuant to Rule 13e-4 under the Securities Exchange Act of 1934 by a closed-end investment company that engages in a continuous offering of its securities pursuant to Rule 415 under the Securities Act of 1933; Provided, however, That such securities are not traded on a securities exchange or through an inter-dealer quotation system or electronic communications network; or
         
         
   3. Redemptions by commodity pools or limited partnerships. Redemptions by commodity pools or limited partnerships, at a price based on net asset value, which are effected in accordance with the terms and conditions of the instruments governing the securities; Provided, however, That such securities are not traded on a securities exchange, or through an inter-dealer quotation system or electronic communications network; or
      
      
   4. Exercises of securities. The exercise of any option, warrant, right, or any conversion privilege set forth in the instrument governing a security; or
      
      
   5. Offers to sell or the solicitation of offers to buy. Offers to sell or the solicitation of offers to buy the securities being distributed; or
      
      
   6. Unsolicited purchases. Unsolicited purchases that are not effected from or through a broker or dealer, on a securities exchange, or through an inter- dealer quotation system or electronic communications network; or
      
      
   7. Transactions in Rule 144A securities. Transactions in securities eligible for resale under Rule 144A(d)(3) under the Securities Act of 1933, or any reference security, if the Rule 144A securities are offered or sold in the United States solely to:
      
      
      1. Qualified institutional buyers, as defined in Rule 144A(a)(1) under the Securities Act of 1933, or to offerees or purchasers that the seller and any person acting on behalf of the seller reasonably believes are qualified institutional buyers, in transactions exempt from registration under section 4(2) of the Securities Act or Rule 144A or Rule 501 through Rule 508 under such Act; or
         
         
      2. Persons not deemed to be "U.S. persons" for purposes of Rule 902(o)(2) or Rule 902(o)(7) under the Securities Act of 1933 [Editor's note: It appears this should be Rule 902(k)(2) and Rule 902 (k)(7).], during a distribution qualifying under paragraph (b)(7)(i) of this section.
         
         
3. Plans.
   
   
   1. Paragraph (a) of this section shall not apply to distributions of securities pursuant to a plan, which are made:
      
      
      1. Solely to employees or security holders of an issuer or its subsidiaries, or to a trustee or other person acquiring such securities for the accounts of such persons; or
         
         
      2. To persons other than employees or security holders, if bids for or purchases of securities pursuant to the plan are effected solely by an agent independent of the issuer and the securities are from a source other than the issuer or an affiliated purchaser of the issuer.
         
         
   2. Bids for or purchases of any security made or effected by or for a plan shall be deemed to be a purchase by the issuer unless the bid is made, or the purchase is effected, by an agent independent of the issuer.
      
      
4. Excepted Securities. The provisions of this section shall not apply to any of the following securities:
   
   
   1. Actively-traded reference securities. Reference securities with an ADTV value of at least $1 million that are issued by an issuer whose common equity securities have a public float value of at least $150 million; Provided, however, That such securities are not issued by the issuer, or any affiliate of the issuer, of the security in distribution.
      
      
   2. Investment grade nonconvertible and asset-backed securities. Nonconvertible debt securities, nonconvertible preferred securities, and asset- backed securities, that are rated by at least one nationally recognized statistical rating organization, as that term is used in Rule 15c3-1 under the Securities Exchange Act of 1934, in one of its generic rating categories that signifies investment grade; or
      
      
   3. Exempted securities. "Exempted securities" as defined in section 3(a)(12) of the Exchange Act; or
      
      
   4. Face-amount certificates or securities issued by an open-end management investment company or unit investment trust. Face-amount certificates issued by a face-amount certificate company, or redeemable securities issued by an open-end management investment company or a unit investment trust. Any terms used in this paragraph (d)(4) that are defined in the Investment Company Act of 1940 shall have the meanings specified in such Act.
      
      
5. Exemptive Authority. Upon written application or upon its own motion, the Commission may grant an exemption from the provisions of this section, either unconditionally or on specified terms and conditions, to any transaction or class of transactions, or to any security or class of securities.
   
   

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