receives compensation from the issuer of the rights for obtaining exercises of rights by security holders to whom they were originally issued.

(b) Except as provided in paragraph (c), no person subject to this section shall offer or sell the securities being distributed, or securities of the same class and series, at a price in excess of the last price set by the person or persons managing the distribution or by a formula prescribed in an agreement with such person or persons. Such price may be set from time to time, but an offering price set in any calendar day may not be increased more than once during such day. If the principal market for such security is a securities exchange, such price shall not, at the time it is so set, exceed the price at which such security last sold on such exchange (plus an amount equal to an change commission) or the current asked price on such exchange (plus such commission), whichever in higher. If the principal market for such munity is not a securities exchange, such sale price shall not, at the time it is so set, exceed the highest price at which a dealer not participating in the distribution is then offering the security to other dealers (plus an amount equal to a dealer's conAscion). The amount of any accrued dividends or interest may be added to such prices,

(a) The provisions of paragraph (b) shall not apply to (1) privately negotiated transactions Affected otherwise than on a securities exchange, wmong persons participating in the distribution;

(2) odd lot fransactions (and the off setting round bob transmetons hereinafter referred to) by #prem pietered as an odd lot dealer in such security on a national securities exchange who off

thod lot fransactions in such security by Frand lot frunes fions as promptly as possible; or Gly brokerage Fransactions not involving solicitatom of the customer's order; or (4) offers and wules at the auber ription price to holders of rights; on Chy offers and sales to members of any group or luem entitled to a special price; or (6) offers and mules of mermities owned beneficially on the record date for the rights or nequired through the Crise of rights issued in respect of securities so owned.

(4) The conditions of subparagraphs (A) through (C) of this paragraph (d) shall apply to all bids for and purchases of rights on behalf of a sole distributor, or a syndicate or group par

ticipating in the distribution, or any r members of such a syndicate or group, d period when (1) the price of the security s stabilized to facilitate the distribution I such sole distributor, or such syndicate or any member or members thereof, having chased, as principal, any right not necess acquire securities previously sold by such pe or such syndicate or group, in connection distribution, has not sold the securities whi been or can be acquired through such rights vided, however, that the conditions of sug graphs (A) through (G) shall not become a cable because of the purchase of rights i transaction described in subparagraph (H this paragraph (d). As used herein the "syndicate or group" means (i) all persons 1 have agreed to purchase from the issuer of r any of the securities offered through but not ;chased upon the exercise of the rights; (# "soliciting dealers" as defined in subparagr (II) (viii) hereof, including a "dealer manag as therein defined, and (iii) all persons who ha agreed with the issuer of rights, or with es other, that they will engage in the purchase rights and the sale of the securities which may acquired through the exercise of rights.

(A) Not more than one bid to purchase righ shall be maintained in any one market at the sa price at the same time; provided, however, th more than one bid at the same price may be mai tained otherwise than on a securities exchange b or for the account of the sole distributor or fe the account of the syndicate or group.

(B) No bid for or purchase of rights shall be made until an independent market for such right: has been established; provided, however, that if (i) trading has not begun on the business day on which trading in such rights could lawfully have begun, and (2) the theoretical value of such rights can be ascertained by a generally accepted mathematical formula-then such right may be purchased thereafter at a price not in excess of such theoretical value.

(C) The initial bid for or purchase of such rights under the conditions of this paragraph (d) shall not be made at a price higher than the highest current independent bid price in the principal market for such rights in the United States open for trading at the time when such bid or purchase

le; provided, however, that if the principal et for such rights is a securities exchange in nited States open for trading at such time, initial bid or purchase may be made in any et at the last independent sale price on such inge if (i) such right has been traded on such inge on such day or on the preceding business and (ii) the current asked price on such exge is equal to or above such sale price; and ided further, that if the initial bid or pure is made after the close of such exchange such al bid or purchase may be made at the price which such initial bid or purchase could have 1 made on such exchange at the close thereof ess the bidder or purchaser knows, or has reato know, that other persons have offered or 1 such right at a lower price after such close. (D) Subject to the limitations in subparagraph ) of this paragraph (d), a bid which is lawful en initiated may be continuously maintained reduced irrespective of changes in the independt bid, asked or sale price of such right. Except provided in subparagraph (E) of this paraaph (d), if the bidding for and purchasing of ghts is discontinued for any reason, bidding for purchasing of rights shall not be resumed expt at a price not exceeding the lower of the two ollowing prices: (i) the last price at which a lawul bid or purchase was made or (ii) the price which would be applicable if it were the initial id or purchase.

(E) The price at which a bid for or purchase of rights is made may be increased only if (i) no rights have been purchased, as principal, for a full business day, by the sole distributor, or any syndicate or group, or any member thereof, except in a transaction described in subparagraph (H) of this paragraph (d), or (ii) the independent bid price in the principal market for such rights in the United States has exceeded such price for a full business day; provided, however, that the increased bid or purchase price in any such case shall meet the requirements which would be applicable if it were the initial bid or purchase. As used herein the term "full business day" shall mean a period beginning at any time on any business day and extending to the same time on the next succeeding business day.

(F) In the event that the conditions of this paragraph (d) have ceased to be applicable, and

then later become applicable again, the first bid for or purchase of rights after such conditions have again become applicable shall be treated as the initial bid for or purchase of rights under the conditions of this paragraph (d) for purposes of subparagraphs (C), (D) and (E) thereof.

(G) Purchases of rights shall be limited to those necessary to acquire the securities which the sole distributor, or the members of the syndicate or group, have previously sold and reasonably expect to be able to sell within five business days after the expiration of the rights.

(H) Except as provided in clause (viii) hereof, the provisions of this paragraph (d) shall not apply to the purchase of rights,

(i) by or through the manager of the distributing group in a privately negotiated transaction effected neither on a securities exchange nor from or through a broker or dealer not participating in the distribution; or

(ii) by an underwriter or dealer directly from a retail customer in an unsolicited privately negotiated transaction not effected on a securities exchange; or

(iii) in stabilizing transactions in the rights effected in compliance with § 240.10b-7; or

(iv) in a privately negotiated transaction, otherwise than on a securities exchange, between persons participating in the distribution acting as principal; or

(v) by a person registered as an odd-lot dealer in such rights on a national securities exchange who is acting in such capacity in effecting such transactions; or

(vi) to complete a sale of rights to a retail customer made under circumstances indicating the purchaser intends to exercise such rights; or

(vii) by the issuer of the rights from the security holder to whom they were originally issued if (1) such rights are not resold, (2) the securities which can be acquired with such rights are not sold by such issuer during the rights period, and (3) such issuer has no agreement to sell the unsubscribed shares or to compensate, directly or indirectly, any person for obtaining exercises of rights except by a security holder to whom they were originally issued; or

(viii) by a dealer-manager, provided that (1) such dealer-manager has no arrangement with the

issuer of the rights to purchase any part of the securities remaining unsubscribed after the rights expire, (2) such dealer-manager purchases such rights for the purpose of supplying the rights, or the security which can be acquired with such rights, to soliciting dealers; provided, however, that such dealer-manager shall not purchase more rights than are necessary to acquire the securities or rights which he reasonably expects to be able to sell to soliciting dealers within five business days after the expiration of the rights, and (3) such dealer-manager purchases such rights in accordance with the conditions set out in subparagraphs (B), (C), (D), (E) and (F) of this subparagraph (d). As used herein, the term "soliciting dealer" shall mean a person entitled to receive, directly or indirectly, from an issuer of rights, compensation for obtaining exercises of such rights; and the term "dealer-manager" shall mean a person who manages a distribution involving soliciting dealers except that the issuer of such rights shall not be deemed to be a dealer-manager.

(e) Whenever any act done or omitted by any person subject to this section would involve a violation of such section only if some other person had previously done or omitted to do some other act, the act or omission of such first-mentioned person shall not involve a violation unless such first-mentioned person knew or had reason to know that such other person had previously done or omitted to do such other act.

(f) This section shall not prohibit any transaction or transactions if the Commission, upon written request or upon its own motion, exempts such transaction or transactions, either unconditionally or on specified terms and conditions, as not constituting a manipulative or deceptive device or contrivance comprehended within the purpose of this section.

EXEMPTION OF CERTAIN SECURITIES FROM SECTION 11 (d) (1)

§ 240.11d-1. Exemption of Certain Securities From Section 11 (d) (1).

A security shall be exempt from the provisions of section 11 (d) (1) with respect to any transaction by a broker and dealer who, directly or indirectly, extends or maintains or arranges for the

(d) The security is acquired by the through the exercise of a right evidenced by. rant or certificate expiring within 90 day issuance, provided such right was originally to the customer as a stockholder of the corp issuing the security upon which credit is to e tended, or as a stockholder of a compar tributing such security in order to effectus provisions of section 11 of the Public [: Holding Company Act of 1935. The rights be deemed to be issued to the customer as a 5 holder if he actually owned the stock giving to the right when such right accrued, even the such stock was not registered in his name; & determining such fact the broker and dealer: rely upon a signed statement of the customer w the broker and dealer accepts in good faith:

(e) Such broker and dealer would otherwis subject to the prohibition of section 11 (d) with respect to 50 percent or less of all the curities of the same class which are outstand or currently being distributed, and such br and dealer sold the security to the customer bought the security for the customer's account a day when he was not participating in the tribution of any new issue of such security. broker-dealer shall be deemed to be participati in a distribution of a new issue if (1) he ow directly or indirectly, any undistributed securit of such issue, or (2) he is engaged in any stabili ing activities to facilitate a distribution of suc issue, or (3) he is a party to any syndicate agree ment under which such stabilizing activities ar being or may be undertaken, or (4) he is a part to an executory agreement to purchase or distribute such issue.

ECURITIES EXEMPTED FROM

REGISTRATION

2a-1. Temporary Exemption From Sec>n 12 (a) of Certain Securities of Banks. The following securities of banks shall be t from the operation of section 12 (a) to cluding the one hundred and twentieth day the adoption of a form specifically prescribed ch securities: (1) securities as to which temy registration expired on June 30, 1935; (2) ities of the same issuer heretofore or hereissued in exchange for, or resulting from a fication of, any securities exempted from the ation of section 12 (a) of the Act by this sec; and (3) additional shares of common stock, tofore or hereafter issued, if common stock he same issuer and of the same class is exted from the operation of section 12 (a) by section.

When a national securities exchange absorbs ther such exchange on which a security is led pursuant to the exemption provided by 3 section, the exemption shall continue in effect h respect to such security on the surviving exange, provided that the surviving exchange omptly certifies to the Commission that it has proved the security for trading upon the apcation or consent of the issuer thereof. (b) §§ 240.7c2-1 and 240.10b-1 shall be applible to all securities exempted from the operation section 12 (a) by this section.

240.12a-2. Temporary Exemption From Section 12 (a) of Certain Securities Secured by Property Which, or a Leasehold Interest in Which, Is Owned by a Person Not the Original Issuer of Such Security-Prohibition of Use of Manipulative or Deceptive Devices or Contrivances With Respect Thereto.

(a) Any security which is secured by property which, or a leasehold interest in which, is now Owned by a person who was not the original issuer of such security, shall be exempt from the operation of section 12 (a) to and including the respective dates indicated below, and for such longer period, if any, as would have been applicable under § 240.12a-1 or § 240.12a-3, if such security had been a security of such owner or lessee:

(A) If temporary registration of such security expired on June 30, 1935, such exemption shall continue to and including November 5, 1935, unless either of the following conditions is satisfied, in which event such exemption shall continue to and including April 30, 1936:

(1) An application for the registration of such security has been filed by the original issuer or by such owner or lessee.

(2) Such owner or lessee has filed with the exchange and with the Commission a statement conforming to the requirements of paragraph (b) of this section as the same existed prior to this amendment.

(B) If such security was listed on an exchange at the time a temporary exemption from registration was granted to such exchange, and shall have continued to be so listed until registration of such exchange became effective, such exemption shall continue to and including April 30, 1936.

If registration pursuant to section 12 (b), (c), and (d) shall become effective as to any obligation evidenced by any such security, such exemption shall forthwith terminate as to such obligation.

(b) Any security exempted by paragraph (a) of this section from the operation of section 12 (a) shall continue to be exempt from the operation of said section 12 (a), to the extent necessary to render lawful the effecting of transactions therein on any national securities exchange on which such security is now listed, until this section shall be revoked or modified, if on or before the twentieth day preceding the expiration of the exemption provided by said paragraph (a) the owner or lessee of the property securing the same shall file with such exchange, and with the Commission, a statement with respect to such security or, if such owner or lessee is personally liable upon such security, an application for the registration of such security, conforming to the following requirements. Such statement or application, as the case may be, shall be made upon the form appropriate for registration of securities of such owner or lessee, shall set forth the information required by such form, and shall contain the following additional statement with respect to such security:

(1) That temporary registration of such security expired on June 30, 1935;

(2) That such security is secured by property which is owned or leased by such owner or lessee