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NASD Rule 2790 restricted persons states that a restricted person may not own more than 10 of a stock How does this effect a stockholders preemptive rights to maintain their share?
Wiki User
∙ 15y ago
NASD 2790 has quite a few exemptions and provisions; one of those regarding restricted persons who already own shares of the stock. This provision allows a restricted person, who already owns shares of the given security, to purchase shares of the new issue if doing so will keep their equity interest at the same level. The buyer must have owned the shares for at least one year prior to the offering and the new shares may not be resold for 3 months following the effective date.
With regard to the a restricted person not being allowed to own more than 10% of a stock: anyone who owns more than 10% of a BROKERAGE FIRM is considered restricted. Although if they have owned the 10% more than a year prior to the new offering then they can be considered exempt and purchase stocks for their own account.
Hope this helps!
Jennifer
Wiki User
∙ 15y ago
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