Current through Register Vol. 54, No. 45, November 9, 2024
Section 21.31 - Distribution transactions(a) Any transaction of purchase and sale, or sale and purchase, of a security which is effected in connection with the distribution of a substantial block of securities, shall be exempt from the provisions of section 302.1(2) of the act (40 P. S. § 422.1(2)) to the extent specified in this section upon the following conditions: (1) The person effecting the transaction shall be engaged in the business of distributing securities and shall be participating in good faith in the ordinary course of the business in the distribution of the block of securities.(2) The security involved in the transaction shall be one of the following:(i) A part of the block of securities, and shall be acquired by the person effecting the transaction with a view to the distribution thereof, from the insurer or other person on whose behalf the securities are being distributed or from a person who is participating in good faith in the distribution of the block of securities.(ii) A security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with the distribution.(3) Other persons not within the purview of section 302.1(2) of the act shall participate in the distribution of the block of securities on terms at least as favorable as those on which the person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the act by this section. The performance of the functions of manager of a distributing group, however, and the receipt of a bona fide payment for performing such functions shall not preclude an exemption which would otherwise be available under this section.(b) The exemption of a transaction under subsection (a) with respect to participation of one party thereto, may not render that transaction exempt with respect to participation of any other party therein unless the other party also meets the conditions of this section.