Question

Under Regulation M, market maker activities in a security subject to a potential acquisition may be limited for a period of time. Which of the following best describes this period of time?

A) 1 business day
B) 3 business days
C) 5 business days
D) 10 business days

Answer 1

Under Regulation M, market maker activities are limited for one business day before the announcement of a potential acquisition to prevent stock price manipulation.

Step-by-step explanation:

Under Regulation M, which governs the activities of market makers and other participants in connection with a public offering of securities, there are restrictions imposed on market makers to prevent stock price manipulation. Specifically, the restrictions relating to market makers in the context of a security that is going to be acquired are meant to prevent market manipulation during the tender offer period. According to the rules established by the Securities and Exchange Commission (SEC), these market maker activities are limited for a period of one business day before the announcement of a potential acquisition up to its completion.