Rule 10b-6

AAA

DEFINITION of 'Rule 10b-6'

A rule set forth by the Securities and Exchange Commission (SEC) that prohibits the purchase of stock by an issuer when the stock has not completed distribution. Rule 10b-6 is designed to prevent issuers from tampering with the market by bidding for shares before they are publicly available. This rule creates an even playing field between investors, brokers, dealers, issuers and underwriters for newly issued shares.

INVESTOPEDIA EXPLAINS 'Rule 10b-6'

The rule prevents broker dealers and underwriters who may be privy to information about a new issue from investing before the general public can. The SEC provides an exception to Rule 10b-6 in Rule 10b-6a, which permits passive market-making transactions to take place.

RELATED TERMS
  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Acting In Concert

    A slang term for when parties undertake identical investment ...
  3. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  4. Tender Offer

    An offer to purchase some or all of shareholders' shares in a ...
  5. New Issue

    A reference to a security that has been registered, issued and ...
  6. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
Related Articles
  1. War's Influence On Wall Street
    Bonds & Fixed Income

    War's Influence On Wall Street

  2. Cashing In On Corporate Restructuring
    Bonds & Fixed Income

    Cashing In On Corporate Restructuring

  3. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  4. 5 Tips For Investing In IPOs
    Investing

    5 Tips For Investing In IPOs

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center