[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR230.142]

[Page 482-483]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933--Table of Contents
 
Sec. 230.142  Definition of ``participates'' and ``participation,'' as used in section 2(11), in relation to certain transactions.

    (a) The terms participates and participation in section 2(11) (48 
Stat. 74, 48 Stat. 905; 15 U.S.C. 77b) shall not include the interest of 
a person (1) who is not in privity of contract with the issuer nor 
directly or indirectly controlling, controlled by, or under common 
control with, the issuer, and (2) who has no association with any 
principal underwriter of the securities being distributed, and (3) whose 
function in the distribution is confined to an undertaking to purchase 
all or some specified proportion of the securities remaining unsold 
after the lapse of some specified period of time, and (4) who purchases 
such securities for investment and not with a view to distribution.
    (b) As used in this section:
    (1) The term issuer shall have the meaning defined in section 2(4) 
(48 Stat. 74, 48 Stat. 905; 15 U.S.C. 77b) and in the last sentence of 
section 2(11).
    (2) The term association shall include a relationship between two 
persons under which one:
    (i) Is directly or indirectly controlling, controlled by, or under 
common control with, the other, or
    (ii) Has, in common with the other, one or more partners, officers, 
directors, trustees, branch managers, or other persons occupying a 
similar status or performing similar functions, or
    (iii) Has a participation, direct or indirect, in the profits of the 
other, or

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has a financial stake, by debtor-creditor relationship, stock ownership, 
contract or otherwise, in the income or business of the other.
    (3) The term principal underwriter shall have the meaning defined in 
Sec. 230.405.

[3 FR 3015, Dec. 16, 1938]

    Cross Reference: For interpretative release applicable to 
Sec. 230.142, see No. 1862 in tabulation, part 231, of this chapter.