Series 79 practice questionmediumLock-Up Agreements
A company completed its IPO 120 days ago at $35 per share. The stock now trades at $52. The CEO contacts the lead underwriter requesting an early release from the 180-day lock-up to sell 500,000 shares for estate planning purposes. What regulatory requirement applies?
- ANo regulatory requirements apply because lock-ups are purely private contracts
- BThe CEO must wait until the full 180 days have passed regardless of circumstances
- CThe SEC must approve the early release through a no-action letter
- DFINRA generally requires notice and a public announcement at least two business days before the release✓ Correct answer
Explanation
Why D — FINRA generally requires notice and a public announcement at least two business days before the release
Rule 5131(d)(2)(B) imposes a two-business-day announcement requirement for covered releases or waivers. The transfer exceptions do not fit a CEO sale for estate planning.
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