Short Sales Around a Public Offering

What this video covers

• What Regulation M prohibits: a restricted-period short sale followed by purchasing offered securities from a participating underwriter, broker or dealer
• Why the short sale itself remains legal, and why buying the subject security in the open market is not the prohibited purchase
• Which offerings are covered: equity securities sold for cash under a registration statement or a Form 1-A or Form 1-E notification
• How to measure the restricted period using the shorter of five business days before pricing or initial filing through pricing
• Why a bona fide purchase must cover the entire restricted-period short sale, occur during regular trading hours, be reported, and happen no later than the business day before pricing
• How the separate accounts and investment company exceptions depend on genuine separation or qualifying affiliated entities
• Why best efforts offerings fall outside this Regulation M short sale rule, unlike firm commitment offerings