Series 79 practice questionmediumTender Offer Rules
If a tender offer is oversubscribed and the bidder cannot purchase all shares tendered, which method must be used to allocate accepted tenders?
- AFirst-come, first-served basis
- BProration among tendering shareholders✓ Correct answer
- CRandom allocation
- DAllocate to largest shareholders first
Explanation
Why B — Proration among tendering shareholders
Proration ensures all shareholders who tender receive an equal percentage of shares accepted, which is required under SEC tender offer rules. Allocating by order or size would be unfair and violate regulations.
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