Bona fide purchase exception

The Rule 105 bona fide purchase exception lets a trader who sold short in the restricted period still buy in the offering, if before pricing they bought at least the same quantity in regular trading hours, after their last short sale and no later than the business day before pricing, and made no reported short sale in the last thirty minutes of trading that day.

manipulation techniques · updated 2026-09-20

Where does bona fide purchase exception come up?

This term is used in the following manipulation techniques, each explained in full on its own page.

• Rule 105 offering shorts — Rule 105 offering shorts are short sales of a stock in the restricted period before a follow-on offering is priced, followed by a purchase of that stock in the offering, which Regulation M Rule 105 prohibits whatever the trader intended.

Enforcement actions involving these techniques

See also

• Rule 105 — Rule 105 of Regulation M, 17 C.F.R. § 242.105, makes it unlawful to sell a stock short in a defined restricted period before a reg…
• Rule 105 restricted period — The Rule 105 restricted period is the shorter of two windows ending at the pricing of an offering: the five business days before p…

Terms that refer here

Rule 105 restricted period

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