General Securities Sales Supervisor (Series10) Practice Exam

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What is the term used for guidelines allowing corporations to buy back stock without being accused of market manipulation?

Rule 147
Regulation A
Rule 10b-18
Regulation D

The correct answer is: Rule 10b-18

The term referring to guidelines that permit corporations to repurchase their stock without the risk of being accused of market manipulation is known as Rule 10b-18. This SEC rule provides a safe harbor for companies engaging in such buybacks, outlining specific conditions under which a corporate repurchase program can be executed. Under Rule 10b-18, companies must adhere to certain requirements, such as limiting the types of purchases they make and the timing of those purchases. By following these guidelines, firms can avoid potential allegations of manipulating stock prices through their buyback activities. This rule is essential for maintaining fair market practices and protecting both the companies and their shareholders. The other choices relate to different regulations. For instance, Rule 147 pertains to intrastate offerings, Regulation A allows companies to offer and sell securities to the public with simplified filing requirements, and Regulation D provides exemptions for private placements. Each of these serves distinct purposes within the securities laws and does not specifically address corporate stock buybacks.