Tag: Rule 10b-18

Study Question of the Week: April 23, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 55, Series 62, and Series 79. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 24, Series 55, Series 62, and Series 79): 

The price of a 10b-18 repurchase transaction:

Answers:

A. Must not exceed the highest independent bid or the last independent transaction price, whichever is higher

B. Must not exceed the highest independent bid or the last independent transaction price, whichever is lower

C. Must not exceed the lowest independent offer or the last independent transaction price, whichever is higher

D. Must not exceed the lowest independent offer or the last independent transaction price, whichever is lower

Correct Answer: A. Must not exceed the highest independent bid or the last independent transaction price, whichever is higher

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, the transaction must be at a price equal to or less than the highest independent bid and the last independent transaction price, whichever is higher. The transaction must comply with broker usage restrictions, timing restrictions, and volume limitations as well.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: February 19, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 55, Series 62, and Series 79. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

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.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.