One continual source of concern for registered investment advisers and other managers who actively trade in the public equity markets is compliance with Rule 105. Rule 105 is part of Regulation M, which is a longstanding set of U.S. Securities and Exchange Commission rules governing the activities of — among others — underwriters, issuers and selling security holders in connection with offerings of securities. While Regulation M covers a fairly wide spectrum of activities related to public offerings, Rule 105 is focused on one specific area of potential abuse, namely short selling prior to a follow-on public offering.
Click here to read this White Paper in which I discuss understanding and applying Rule 105, as well as the Rule’s exceptions and penalties.