Series 79 practice questioneasyStabilization
After a public offering, which of the following stabilization actions is permitted under Regulation M?
- ABuying shares above the public offering price to support the secondary market
- BPlacing a stabilization bid at or below the public offering price✓ Correct answer
- CSelling additional shares to push the price up
- DExecuting short sales to create downward pressure on the price
Explanation
Why B — Placing a stabilization bid at or below the public offering price
Regulation M permits syndicate members to place a stabilization bid at or below the offering price only. Buying above the price or selling additional shares to manipulate the price is prohibited to prevent artificial price inflation.
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