c) The provisions of this section shall not ply in respect to any salary paid by a broker or ler to any person regularly employed by him ose ordinary duties include the solicitation or ecution of brokerage orders on a national secuies exchange, if such salary represents only dinary compensation for the discharge by such rson of such duties in the regular course of his iployment, and is not paid, in whole or in part, rectly or indirectly, for the inducement by such rson of the purchase or sale on a national secuties exchange of any security of the issuer of the ›curity in the primary or secondary distribution f which such broker or dealer is participating or therwise financially interested.

(d) (1) The provisions of this section shall not pply to any transaction involving the payment of ompensation pursuant to the terms of an effective olan authorizing the payment of such compensaion in connection with a distribution of securities, which plan has been filed with the Commission by a national securities exchange, provided that the person paying such compensation does not know or have reasonable grounds to believe, at the time he pays or offers or agrees to pay such compensation, that transactions connected with such distribution are being carried out in violation of such plan.

(2) For the purposes of this section a plan filed with the Commission by a national securities exchange shall not become effective unless the Commission, having due regard for the public interest and for the protection of investors, declares the plan to be effective. The Commission in its declaration may impose such terms and conditions relating to the provisions of the plan and the period of its effectiveness as it deems necessary or appropriate in the public interest or for the protection of investors.

§ 240.10b-3. Employment of Manipulative and Deceptive Devices.

It shall be unlawful for any broker or dealer, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, to use or employ, in connection with the purchase or sale of any security otherwise than on a national securities exchange, any act, practice, or course of business defined by the Commission

to be included within the term "manipulative, deceptive, or other fraudulent device or contrivance," as such term is used in section 15 (c) (1) of the Act.

§ 240.10b-5. Employment of Manipulative and Deceptive Devices.

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange,

(1) to employ any device, scheme, or artifice to defraud,

(2) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

§ 240.10b-6. Prohibitions Against Trading by Persons Interested in a Distribution.

(a) It shall constitute a "manipulative or deceptive device or contrivance" as used in Section 10 (b) of the Act for any person,

(1) who is an underwriter or prospective underwriter in a particular distribution of securities,

or

(2) who is the issuer or other person on whose behalf such a distribution is being made, or

(3) who is a broker, dealer, or other person who has agreed to participate or is participating in such a distribution,

directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, either alone or with one or more other persons, to bid for or purchase for any account in which he has a beneficial interest, any security which is the subject of such distribution, or any security of the same class and series, or any right to purchase any such security, or to attempt to induce any person to purchase any such security or right, until after he has completed his participation in such distribution; provided, however, that this section shall not prohibit (1) transactions in

connection with the distribution effected otherwise than on a securities exchange with the issuer or other person or persons on whose behalf such distribution is being made or among underwriters, prospective underwriters or other persons who have agreed to participate or are participating in such distribution; (2) unsolicited privately negotiated purchases, each involving a substantial amount of such security, effected neither on a securities exchange nor from or through a broker or dealer; or (3) purchases by an issuer effected more than forty days after the commencement of the distribution for the purpose of satisfying a sinking fund or similar obligation to which it is subject; or (4) odd-lot transactions (and the off-setting round-lot transactions hereinafter referred to) by a person registered as an odd-lot dealer in such security on a national securities exchange who offsets such odd-lot transactions in such security by round-lot transactions as promptly as possible; or (5) brokerage transactions not involving solicitation of the customer's order; or (6) offers to sell or the solicitation of offers to buy the securities being distributed (including securities or rights acquired in stabilizing) or securities or rights offered as principal by the person making such offer to sell or solicitation; or (7) the exercise of any right or conversion privilege to acquire any security; or (8) stabilizing transactions not in violation of § 240.10b–7; or (9) bids for or purchases of rights not in violation of § 240.10b-8; or (10) transactions effected on a national securities exchange in accordance with the provisions of a plan filed by such exchange under § 240.10b-2 (d) and declared effective by the Commission; or (11) purchases or bids by an underwriter, prospective underwriter or dealer otherwise than on a securities exchange, 10 or more business days prior to the proposed commencement of such distribution (or 5 or more business days in the case of unsolicited purchases), if none of such purchases or bids are for the purpose of creating actual, or apparent, active trading in or raising the price of such security. In the case of securities offered pursuant to an effective registration statement under the Securities Act of 1933 the distribution shall not be deemed to commence for purposes of this clause (11) prior to the effective date of the registration statement.

(b) The distribution of a security (1) immediately exchangeable for or convertible another security, or (2) which entitles the t thereof immediately to acquire another ser shall be deemed to include a distribution cf= other security within the meaning of this s

(c) The following shall be applicable for. purposes of this section:

(1) The term "underwriter" means a pe who has agreed with an issuer or other pers whose behalf a distribution is to be made (A purchase securities for distribution or (B· distribute securities for or on behalf of such is or other person or (C) to manage or supervis distribution of securities for or on behalf of s issuer or other person.

(2) The term "prospective underwriter" me. a person (A) who has agreed to submit or submitted a bid to become an underwriter of curities as to which the issuer, or other person whose behalf the distribution is to be made, issued a public invitation for bids, or (B) who reached an understanding, with the issuer or othe person on whose behalf a distribution is to made, that he will become an underwriter, wheth or not the terms and conditions of the underwr ing have been agreed upon.

(3) A person shall be deemed to have com pleted his participation in a particular distrib tion as follows: (A) the issuer or other person c whose behalf such distribution is being made when such distribution is completed; (B) & underwriter, when he has distributed his par ticipation, including all other securities of th same class acquired in connection with the distribution, and any stabilization arrangements and trading restrictions with respect to such dis tribution to which he is a party have been ter minated; (C) any other person, when he has distributed his participation. A person, includ ing an underwriter or dealer, shall be deemed for purposes of this paragraph (c) (3) to have distributed securities acquired by him for invest

ment.

(d) The provisions of this section shall not apply to any of the following securities: (1) "exempted securities" as defined in section 3 (a) (12) of the Act, including securities issued, or guaranteed both as to principal and interest, by the International Bank for Reconstruction and Develop

t; or (2) face-amount certificates issued by a -amount certificate company, or redeemable rities issued by an open-end management comy or a unit investment trust. Any terms used lause (2) of this paragraph (d) which are ned in the Investment Company Act of 1940 11 have the meanings specified in such Act. e) The provisions of this section shall not bly to any distribution of securities by an issuer rts employees, or to employees of its subsidiaries, to a trustee or other person acquiring such serities for the account of such employees, purint to (1) a stock option plan involving only estricted stock options" as defined in section 421 the Internal Revenue Code; or (2) a savings, vestment or stock purchase plan providing for th (A) periodic payments (or payroll deducons) for acquisition of securities by participatg employees and (B) periodic purchases of the curities by participating employees, or the per›n acquiring them for the account of such emloyees.

(f) This section shall not prohibit any transction or transactions if the Commission, upon vritten request or upon its own motion, exempts uch transaction or transactions, either uncondiionally or on specified terms and conditions, as not constituting a manipulative or deceptive device or contrivance comprehended within the purpose of this section.

§ 240.10b-7. Stabilizing to Facilitate a Distribution.

(a) Scope of Section. The provisions of this section shall apply to any person who, either alone or with one or more other persons, directly or indirectly, stabilizes the price of a security to facilitate an offering of any security. It shall constitute a "manipulative or deceptive device or contrivance," as used in section 10 (b) of the Act, for any such person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, to effect, either alone or with one or more other persons, any transaction or series of transactions prohibited by this section.

(b) Definitions. Unless the context clearly indicates otherwise, for the purposes of this section the following terms shall have the meaning indicated:

(1) The term "offering at the market" shall mean an offering in which it is contemplated that any offering price set in any calendar day will be increased more than once during such day.

(2) The term "transaction" shall mean a bid or a purchase.

(3) The terms "stabilize", "stabilizes", "stabilizing" or "stabilized" shall mean the placing of any bid, or the effecting of any purchase, for the purpose of pegging, fixing or stabilizing the price of any security; provided, however, that a bid shall not constitute a stabilizing bid unless or until it is shown in the market.

(c) Transactions Must Be Necessary. No stabilizing bid or purchase shall be made except for the purpose of preventing or retarding a decline in the open market price of a security.

(d) Priority Must Be Granted. Any persons placing or transmitting a bid which he knows is for the purpose of stabilizing the price of any security shall disclose the purpose of such bid to the person with whom it is placed or to whom it is transmitted. Any person placing a stabilizing bid or effecting a stabilizing purchase on a securities exchange shall grant priority to any independent bid at the same price irrespective of the size of such independent bid or the time when it is entered. Any person placing a stabilizing bid or effecting a stabilizing purchase otherwise than on a securities exchange shall grant priority to any independent bid at the same price placed with or transmitted to him irrespective of the size of such independent bid or the time when it is entered.

(e) Control of Stabilizing. No sole distributor or syndicate or group stabilizing the price of a security nor any member or members of such syndicate or group shall maintain more than one stabilizing bid in any one market at the same price at the same time; provided, however, that more than one such bid at the same price may be maintained otherwise than on a securities exchange by or for the account of such distributor, syndicate or group.

(f) Stabilizing at Prices Resulting From Unlawful Activity. No stabilizing shall be initiated at a price which the stabilizer knows or has reason to know is the result of activity which is fraudulent, manipulative, or deceptive under the Act or any rule or regulation thereunder.

(g) Stabilizing Prohibited in Offerings at the Market. No person shall effect any stabilizing transaction to facilitate any offering at the market.

(A) Stabilizing Securities Traded in More Than One Market. If a security is traded in more than one market, stabilizing shall not be initiated at any price which would be unlawful in the market which is the principal market for such security in the United States open for trading at the time when such stabilizing is initiated; provided, however, that if the principal market for such security in the United States is a securities exchange, stabilizing may be initiated in any market after the close of such exchange at the price at which stabilizing could have been initiated on such exchange at the close thereof unless the person stabilizing knows or has reason to know that other persons have offered or sold such security at a lower price after such close, except that special prices available to any group or class of persons (including employees or holders of warrants or rights) shall not limit the stabilizing price.

(7) Entering Stabilizing Bid on Exchange Prior to Opening. No person shall place a stabilizing bid on a securities exchange prior to the time the opening quotations for the security on such exchange are available, unless he has been and is lawfully stabilizing such security at such price; provided, however, that a stabilizing bid may be made immediately prior to the opening of a securities exchange at a price not in excess of the price nt which stabilizing could have been initiated on such exchange at the previous close thereof, unless the person stabilizing knows or has reason to know that other persons have offered or sold such security at a lower price after such close, except that special prices available to any group or class of persons (including employees or holders of warrants or rights) shall not limit the stabilizing price.

(j) Stabilizing Levels. (1) Except as provided in subparagraphs (2), (3) and (4) of this paragraph (j), no person shall (A) begin to stabilize a security at a price higher than the highest current independent bid price for such security or (B) raise the price at which he is stabilizing. If no bona fide market for the security being distributed exists at the time

stabilizing is initiated, stabilizing may be at a price not in excess of the public offering (2) If the principal market for a se a securities exchange and stablizing is i on such exchange the initial stabilizing bid v chase may be made at a price not in excess last independent sale price on such exchang (A) the security has been traded on such ex on the day when stabilizing is begun, on eit the two preceding calendar days, or on the preceding business day, and (B) the current price is equal to or above the last independer price. If both conditions (A) and (B) a met, no person shall begin to stabilize the sect at a price in excess of the highest current E pendent bid price for such security; pro however, that if a stabilizing bid has been ente at such independent bid price and the first 5. thereafter on the exchange is an independent s at a higher price, the security may be stabil at a price not in excess of such independent s price.

(3) If a stabilizing bid or purchase is m before the initial public offering price of security to be distributed is determined, and su offering price is higher than such stabilizing bid purchase price, then stabilizing may be resunt after determination of such public offering pri at the price at which it could then be initiate provided, however, that special prices availab to any group or class of persons (including en ployees or holders of warrants or rights) shal not constitute the initial public offering price for purposes of this subparagraph (3).

(4) A stabilizing bid lawful when made may be continuously maintained or reduced irrespective of changes in the independent bid, asked or sale price of such security; provided, however, that no stabilizing shall be done at a price higher than the price at which stabilizing is being done in the principal market for such security. Except as provided in subparagraph (3) of this paragraph (j), if stabilizing is discontinued for less than three business days it shall not be resumed in connection with the same distribution except at the lower of the two following prices: (A) the last lawful stabilizing price, or (B) the price at which stabilizing could then be initiated. If no stabilizing purchases have been effected for three consecutive business days then stabilizing may be con

or resumed at the price at which it could e initiated.

No person shall stabilize a security at a above the price at which such security is itly being distributed; provided, however, · pecial prices available to any group or class rsons (including employees or holders of ints or rights) shall not limit the stabilizing

) If a security goes ex-dividend, ex-rights, or stribution, the price at which such security ing stabilized shall be reduced by an amount 1 to the value of the dividend, right, or disition, computed to the nearest trading differal; provided, however, that if the dividend, it or distribution has a value of not more than percent of the minimum price differential, the bilizing price need not be reduced.

7) When two or more securities are being ofed as a unit, the component securities shall be stabilized at prices the sum of which exds the offering price of the unit; provided, wever, that special prices available to any group class of persons (including employees or holders warrants or rights) shall not limit the stabiing price.

(8) If a security is being called or redeemed shall be unlawful to stabilize such security at price above such call or redemption price plus ccruals, if any; provided, however, that if such ecurity is immediately convertible into or exhangeable for another security or securities, and If the amount of such other security or securities (into which it is convertible or for which it is exchangeable) multiplied by their highest lawful stabilizing price exceeds the call or redemption price plus accruals, then the security may be stabilized at a price not in excess of such price, to the nearest trading differential.

(4) Disclosure of Stabilizing. Any person subject to this section who sells to, or purchases for the account of, any person, any security or any right or warrant to subscribe to any such security, where the price of such security, right or warrant has been stabilized, shall give or send to such person, at or before the completion of each transaction entered into while the distribution is

progress, written notice that stabilizing purchases may be or have been effected. If, however, at or before the completion of the transaction,

the purchaser receives a prospectus, offering circular, confirmation or other writing containing a statement similar to that comprising the legend provided for in § 230.426 under the Securities Act of 1933, then no other written notice with respect to stabilizing need be given to such purchaser.

(7) Reporting Requirements. A person subject to this section shall file with the Commission the reports and notices required to be filed by § 240.17a-2 even though he is not subject to that section as a broker, dealer, or member of a national securities exchange.

(m) Limitation of Liability. Whenever any act done or omitted by any person subject to this section would involve a violation of such section only if some other person had previously done or omitted to do some other act, the act or omission of such first-mentioned person shall not involve a violation unless such first-mentioned person knew or had reason to know that such other had person previously done or omitted to do such other act.

(n) Exempted Securities. The provisions of this section shall not apply to "exempted securities", as defined in section 3 (a) (12) of the Act, including securities issued, or guaranteed both as to principal and interest, by the International Bank for Reconstruction and Development.

(0) Exempted Transactions. This section shall not prohibit any transaction or transactions if the Commission, upon written request or upon its own motion, exempts such transaction or transactions, either unconditionally or on specified terms and conditions, as not constituting a manipulative or deceptive device or contrivance comprehended within the purpose of this section. § 240.10b-8. Distributions Through Rights.

(a) Scope of Section. It shall constitute a "manipulative or deceptive device or contrivance" as used in section 10 (b) of the Act for any person participating in a distribution of securities being offered through rights issued on a pro-rata basis to security holders, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, to do any act prohibited by this section prior to the expiration of the rights; provided, however, that a person shall not be subject to this section merely because he