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Question (Relevant to the Series 24, Series 55, Series 62, and Series 79):
In order to qualify for the Rule 10b-18 safe harbor for repurchases, which of the following is correct?
I. The repurchase transactions made in a single day must occur through only one broker-dealer
II. The repurchase transactions made in a single week must occur through no more than two broker-dealers
III. The repurchase transactions must occur within 10 minutes of market open or within 30 minutes of market close
IV. The repurchase transactions must not be the opening transaction or within 30 minutes of market close
Answers:
A. I and III
B. I and IV
C. II and III
D. II and IV
Correct Answer: B. I and IV
Rationale: Rule 10b-18 provides a safe harbor for issuer repurchase transactions. It allows the issuer to repurchase its own stock without being liable for manipulation based solely on the manner, timing, price, and volume of the repurchase transactions. In order to qualify, any repurchase transactions made in a single day must be made through only one broker-dealer. The transactions also must not be the opening transaction or within 30 minutes of the close of that market. For actively traded securities, the transactions must not be the opening purchase or within 10 minutes of the close of that market (actively traded securities are those with an ADTV of at least $1 million and a public float of at least $150 million). The transactions must comply with price and volume limitations as well.
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