Saturday, August 28, 2021 9:16:51 AM
5. POSSIBLE EXEMPTIONS
Based on numerous comment letters that it received on the proposed amendments, the SEC expressly recognized
that there are concerns about the loss of quoted markets for certain securities as a result of the implementation of
the Rule, and stated that it would be open to considering requests for exemptions. 29 With particular focus on the
loss of piggybacking, the SEC stated that the following factors would be relevant in considering an exemption request,
depending upon the facts and circumstances:
- issuers and/or securities that are less susceptible to fraud or manipulation;
- securities that have an established prior history of regular quoting and trading activity;
- issuers that do not have an adverse regulatory history;
- issuers that have complied with any applicable state or local disclosure regulations that require that the
issuer provide its financial information to its shareholders on a regular basis, such as annually;
- issuers that have complied with any tax obligations as of the most recent tax year;
- issuers that have recently made material disclosures as part of a reverse merger; and
- facts and circumstances that present other features that are consistent with the goals of the amended Rule
of enhancing protections for investors, particularly retail investors.
++++++------Intriguingly, the SEC also said that it was open to the possibility of recognizing an “expert market” where the Rule
would not apply. In such a market, quote distribution would be limited to “professional investors” and certain nonprofessional investors would only be allowed to liquidate holdings.30 The SEC discussed some features of this
market:31--------
-It must not have the potential to develop into a parallel market for which quotations are accessible by retail
investors and the general public; and
- It would be narrowly tailored to sophisticated investors, such as qualified institutional buyers, accredited
investors, registered investment companies and investment advisers, banks, and broker-dealers.
The SEC recommended that requests for exemption be make expeditiously during the 9-month transition period.32
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