Issuers and Distribution Participants: Regulation M

The SEC’s Regulation M, which we discuss further in Chapter 7, is intended to prevent fraud and manipulation of prices in a public offering by persons with a financial interest in the offering. Specifically, Regulation M prohibits underwriters from inflating the post-offering price of securities by buying up shares themselves.

Rule 101 prohibits a participant in the distribution of a security, or an affiliated purchaser, from directly or indirectly bidding for, purchasing, or attempting to induce any person to bid for or purchase the security during the “restricted period.” Underwriters, prospective underwriters, and members of the selling group all fall within the definition of “distributio