Close-Out Requirements for Threshold Securities

What this video covers

• How a threshold security must meet the 10,000-share fail test, the 0.5% shares-outstanding test, and the self-regulatory organization (SRO) list requirement
• Why the share-count and percentage tests are conjunctive, and why a security can exit threshold status without the fail position reaching zero
• How to count five-day, thirteen-day, and thirty-five-day close-out clocks using consecutive settlement days rather than calendar days
• Which participant must close out a thirteen-day fail, and why the required remedy is an immediate purchase of securities of like kind and quantity
• How the restricted securities resale safe harbor creates a thirty-five-day close-out deadline while keeping the same purchase remedy
• How reasonable allocation transfers only the portion tied to another firm's short position, leaving the rest with the clearing participant
• Why borrowing, sham purchase arrangements, and other substitutes do not satisfy the close-out requirement or lift related short-sale restrictions