3 ms·

Do SEC rules prohibit you from hedging?

• beagle3 15y ago
  They used to explicitly prohibit you. As far as I can tell, they don't explicitly prohibit you but they say something like "we'll look at it badly if you do" in their publications. Make of that what you will.
  • aquark 15y ago
    Why would they care? I really can't think of a rationale for that stance. OTOH why would I presume one should exist?
    • beagle3 15y ago
      Well, it's basically a protection against intricate pump-and-dump schemes that include mergers and acquisitions - the rule basically says shares allocated (rather than _bought_ or invested into) need to be held for 6 months. (It is sometimes known as "lockup period", and versions of it exist in many countries). However, the entire allocated stock in this deal is ~1% of the buying company; so this protects no one. Even if all of the allocated shares were sold on day 1, the stock would not have moved more than ~5% as a result. However, the market conditions has caused it to move 40% in a week.