15 U.S.C. § 80a–22 — Distribution, redemption, and repurchase of securities; regulations by securities associations

(a) A securities association registered under section 78o-3 may adopt rules, following that section's process, that set: (1) a way to calculate the lowest price a member firm can pay when buying a redeemable security from an investment company, and the highest price a member can charge when selling that security back to the company or receive on redemption — tied to the security's current net asset value at a time the rules specify; and (2) a minimum waiting period after a security is sold or issued before a member can resell it to the company or redeem it. Both rules aim to stop, or cut down as much as reasonably possible, any drop in value ("dilution") for the company's other outstanding securities, or any other result of the purchase, redemption, or sale that is unfair to holders of those other securities. The association's rules can also flatly prohibit members from buying, selling, or turning in for redemption any such security in violation of these rules. (b) (1) The same kind of association may also adopt rules — despite one part of section 78o-3(b)(6), but still following that section's other applicable rules — that stop members from buying a security directly from the issuer or a principal underwriter, during a first-time sale of an investment company's redeemable securities, at any price other than the public offering price minus a commission, discount, or spread figured under a method the rules set out, within limits the rules set for how that discount relates to the public offering price. The point is to make sure the public offering price does not include an excessive sales load, while still allowing reasonable pay for sales staff, dealers, and underwriters, and reasonable sales charges for investors. If smaller companies face relatively higher operating costs, the SEC must, on request or otherwise, grant them appropriate qualified exemptions from this rule. (2) Starting eighteen months after December 14, 1970 (or sooner, once an association adopts its own rule on excessive sales loads for this purpose), the SEC may change or add to any association's rules as needed to carry out this subsection, using the process in section 78s(c). (3) If this subsection conflicts with any other federal law in effect on December 14, 1970, this subsection wins. (c) The SEC can make its own rules for registered investment companies, and for principal underwriters of and dealers in their redeemable securities — whether or not those underwriters and dealers belong to a securities association — covering the same subject matter and purposes as subsection (a). If the SEC's rules conflict with an association's rules, the SEC's rules take over for as long as they're in force, and bind the association's members as well as every other underwriter and dealer the rules cover. (d) A registered investment company can sell its own redeemable securities only through a principal underwriter, or at the current public offering price described in the prospectus. Once a security class is being offered to the public, a principal underwriter or dealer likewise can sell only to a dealer, a principal underwriter, or the issuer — or at the prospectus's public offering price. This rule does not block: (i) a sale under an exchange offer allowed by section 80a-11, including one made under section 80a-11(b); (ii) a sale under an offer made only to all registered holders of the securities, or of a class or series, proportionate to what they already hold or to a cash distribution the company is making to them, subject to reasonable adjustments solely to avoid issuing fractional securities; or (iii) a sale made under SEC rules issued under section 80a-12(b). (e) A registered investment company cannot suspend a security holder's right to redeem, or delay paying or satisfying a redemption, for more than seven days after the security is tendered to the company or its agent for that purpose — except: (1) for any period during which (A) the New York Stock Exchange is closed for reasons beyond customary weekend and holiday closings, or (B) trading on the New York Stock Exchange is restricted; (2) for any period during which an emergency exists such that (A) the company cannot reasonably dispose of securities it owns, or (B) it cannot reasonably determine the value of its net assets; or (3) for other periods the SEC allows by order to protect the company's security holders. The SEC decides, by rule, what counts as "restricted" trading and what counts as an "emergency" for this purpose. (f) A registered open-end company cannot restrict how its securities can be transferred or traded, except in line with what its own registration statement says, and except as SEC rules allow in the interest of the holders of all of the company's outstanding securities. (g) A registered open-end company cannot issue its securities (1) for services, or (2) for property that isn't cash or securities (including its own securities) — unless it's doing so as a dividend or distribution to its own security holders, or as part of a reorganization.