Late last year, the Securities and Exchange Commission issued amendments to Regulation M of the Securities Exchange Act of 1934, which regulates activities by issuers and underwriters while securities are being offered.
The rule, originally codified in 1955, was developed to prevent market participants from manipulating the price of an offered security. For example, it is Reg. M that prohibits companies, underwriters and other market participants from buying “or attempting to induce any person to bid for or purchase” securities during restricted periods. The regulation is also prophylactic or preventative in nature, as it attempts to address manipulation before it occurs by preventing parties from engaging in certain market activities.
