Regulation M

Rule 105
Short Selling in Connection with a Public Offering

a. Unlawful Activity. In connection with an offering of securities for cash pursuant to a registration statement or a notification on Form 1-A (239.90 of this chapter) or Form 1-E (239.200 of this chapter) filed under the Securities Act of 1933 ("offered securities"),  it shall be unlawful for any person to sell short (as defined in 242.200(a)) the security that is the subject of the offering and purchase the offered securities from an underwriter or broker or dealer participating in the offering if such short sale was effected during the period (Rule 105 restricted period) that is the shorter of the period:

1. Beginning five business days before the pricing of the offered securities and ending with such pricing; or

2.  Beginning with the initial filing of such registration statement or notification on Form 1-A or Form 1-E and ending with the pricing.

b.  Excepted Activity.

1. Bona Fide Purchase. It shall not be prohibited for such person to purchase the offered securities as provided in paragraph (a) of this section if:

i. Such person makes a bona fide purchase(s) of the security that is the subject of the offering that is:

A. At least equivalent in quantity to the entire amount of the Rule 105 restricted period short sale(s);

B. Effected during regular trading hours;

C. Reported to an effective transaction reporting plan (as defined in 242.600(b)(22)); and

D. Effected after the last Rule 105 restricted period short sale, and no later than the business day prior to the day of pricing; and

ii. Such person did not effect a short sale, that is reported to an effective transaction reporting plan, within the 30 minutes prior to the close of regular trading hours (as defined in 242.600(b)(64)) on the business day prior to the day of pricing.

2. Separate Accounts. Paragraph (a) of this section shall not prohibit the purchase of the offered security in an account of a person where such person sold short during the Rule 105 restricted period in a separate account, if decisions regarding securities transactions for each account are made separately and without coordination of trading or cooperation among or between the accounts.

3. Investment Companies. Paragraph (a) of this section shall not prohibit an investment company (as defined by Section 3 of the Investment Company Act) that is registered under Section 8 of the Investment Company Act, or a series of such company (investment company) from purchasing an offered security where any of the following sold the offered security short during the Rule 105 restricted period:

i. An affiliated investment company, or any series of such a company; or

ii. A separate series of the investment company.

c. Excepted Offerings. This section shall not apply to offerings filed under Rule 415 of this chapter or to offerings that are not conducted on a firm commitment basis.

d. Exemptive Authority. Upon written application or upon its own motion, the Commission may grant an exemption from the provisions of this section, either unconditionally or on specified terms and conditions, to any transaction or class of transactions, or to any security or class of securities.

Authority: 15 U.S.C. 77g, 77q(a), 77s(a), 78b, 78c, 78g(c)(2), 78i(a), 78j, 78k-1(c), 78l, 78m, 78n, 78o(b), 78o(c), 78o(g), 78q(a), 78q(b), 78q(h), 78w(a), 78dd-1, 78mm, 80a-23, 80a29, and 80a-37.