This webinar discusses anti-manipulation rules concerning securities offerings. It is presented by Craig Taggart, who has experience in mergers and acquisitions and business financing. The webinar covers proposed rules by the CFTC and SEC to expand prohibitions on market manipulation. It also discusses red flags of securities fraud and defines key terms like manipulation. Regulation M is examined, which consists of 6 rules governing various activities in securities offerings.

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This training session is sponsored by
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Anti Manipulation Rules
Concerning Securities Offerings
This Training is Brought to you by ComplianceOnline.
Presenter: Craig M. Taggart

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 Instructor Profile:
 Craig Taggart has almost a decade of experience in the fields of mergers and acquisitions and
business financing. Mr. Taggart works strategically with his clients to achieve the highest value
for their business within the capital markets. His experience with BCC Capital Partners in the
M&A industry has greatly contributed to his understanding of transaction structure, strategic
 placement of buyers, and the attainment of maximum market value for his clients. He has
represented and sold many businesses in a number of different industries and has significant
experience working with companies in: continuing education, transportation, software and
professional services. Mr. Taggart is currently working in the clean energy sector that covers
multiple initiatives within M&A and corporate development.
 He is a certified merger and acquisition advisor, accredited valuation analyst as well as an active
member of Alliance of Mergers and Acquisition, and The National Association of Certified
Valuators and Analysts (NACVA). Mr. Taggart has been a certified fraud examiner since 2011
and has owned an investigative franchise business, which focused on fraud based cases
involving insurance, asset searches, surveillance, witness statements
 He earned his MBA from the San Diego State University specializing in financial management.
Mr. Taggart graduated from the California State University Northridge with a bachelor’s degree
majoring in organizational psychology.

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 Areas Covered in the Webinar:
 CFTC Proposes Rules to Expand Prohibition on Market
Manipulation
 Prohibition of Price Manipulation
 SEC Proposes Rule 9j-1 under the Exchange Act for
Security-based Swaps
 The red flags of securities fraud
 The four fundamental categories of securities fraud
 The monetary scope of securities fraud
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 Investment-fraud terminology
 Investigative resources and examination strategies
 SEC Regulation M-Related Notice Requirements
 What is a distribution and magnitude of the offering
under this regulation
 Rule 5190

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Agenda
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The Securities and Exchange Commission
(Commission) is proposing amendments to Regulation
M under the Securities Exchange Act of 1934
(Exchange Act), which governs the activities of
underwriters, issuers, selling security holders, and
others in connection with offerings of securities. The
proposed amendments are intended to prohibit certain
activities by underwriters and other distribution
participants that can undermine the integrity and
fairness of the offering process, particularly with respect
to allocations of offered securities.

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 The proposal also seeks to enhance the transparency
of syndicate covering bids, which may affect the
aftermarket price and trading of an offered security,
and prohibit the use of penalty bids. The amendments
also are intended to update certain definitional and
operational provisions in light of market developments
since Regulation M's adoption. As a consequence of
these proposed amendments to Regulation M, we are
also recommending corresponding changes to
disclosure rules under the Securities Act of 1933
("Securities Act") as well as changes to certain
recordkeeping rules under the Exchange Act.
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 Definition of Manipulation source Securities and Exchange Commission
 Manipulation interferes with the securities markets’
fundamental function as an independent pricing
mechanism and undermines the markets’ integrity and
fairness. Under the securities laws, Congress granted
the Commission broad authority to combat
manipulative conduct. The Commission, in turn, has
recognized that special opportunities and incentives
for manipulation arise in securities offerings and has
determined that certain offerings require specific
regulation.
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 Consequently, the Commission has focused its
regulation on market activities that could artificially
facilitate an offering. Because price integrity is
essential during a securities offering, the Commission
adopted rules to proscribe and regulate activities that
offering participants could use to manipulate the price
of the offered security. The anti-manipulation rules
were first codified in 1955, and today, Regulation M
incorporates these provisions.3 Regulation M, among
other things, prohibits issuers, selling security holders,
underwriters, broker-dealers,

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 and other distribution participants4 from directly or
indirectly bidding for, purchasing, or attempting to
induce any person to bid for or purchase any security
that is the subject of the distribution during the
applicable restricted period.5 Regulation M proscribes
activities that may increase a security’s offering price,
and so increase the offering proceeds; or may stabilize
the market price of an offered security in order to
avoid a price decline during the sales period or in the
immediate aftermarket, or to induce or attempt to
induce prospective investors to buy in the
aftermarket.
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 Commodity Futures Trading Commission(CFTC) Proposed Rules
 Q:Would the proposed rules impose margin requirements on
commercial end users?
 A: No. The rule requires a swap dealer (SD) or major swap
participant (MSP) to collect margin if its counterparty is another
SD/MSP or a financial entity other than an SD/MSP. An SD/MSP
would collect initial and variation margin from a nonfinancial
end user only to the extent the parties had mutually agreed to
this in their privately-negotiated credit support arrangements.
 Q:What products would the proposed rules cover?
 A: The rules would apply to uncleared swaps entered into after
the effective date of the regulation. The proposal would not
apply retroactively
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 Q: Did the Commission consult with other US authorities in developing these
rules?
 A: Yes. Staff of the Commission consulted with staff of the Federal Reserve
Board, the Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Farm Credit Administration, and the Federal
Housing Finance Agency (collectively, the Prudential Regulators) in
developing these rules. Staff of the Securities and Exchange Commission also
participated in these consultations. The proposed rules of the Commission
and the Prudential Regulators are very similar.
 Q: Are the proposed rules similar to international standards?
 A: Yes. The proposed rules are very similar to the standards issued by the
Basel Committee on Banking Supervision and the International Organization
of Securities Commissions in September of 2013. In a few instances the
Commission and the Prudential Regulators are stricter. For example the
international standards would permit limited rehypothecation of initial
margin. The proposed rules would prohibit it.
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Agenda
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Why Should You Attend:
Education is power! There are not many other industries,
that this concept could not be truer. The securities
industry is the most regulated, compliance, governance
driven industry in the country. This is actually for good
reason, this is also one of the most lucrative fields a
person can pursue regarding their overall career path.
Here in lies the key reasons, with more rules and
regulations, comes more securities exams and what you
don’t know can be severely destructive to your company,
firm, practice at many levels. As we have read the more
monetary gain a person has, that same person has more
inclination to break the rules or commit fraud as fear and
greed come in to play more often than not in Wall Street
based careers.

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 We will review how these new rules and laws can make you
aware of what to look for in the workplace, a key skill set if you
are part of any compliance or risk management departments.
Perpetrators of securities fraud are responsible for not only a
loss of assets, but also the devastation of investor confidence,
which can carve away at the respect people have for the global
financial markets. The destruction caused by their actions, both
emotional and financial, is staggering. In fact, one respected
academic study from Stanford Law School reported an annual
damage estimate of nearly $700 billion for 2007. In a time when
headlines are filled with the stories of Madoff and Stanford,
preventing and investigating securities fraud is now more
important than ever.
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 Regulation M consists of 6 rules source Securities and Exchange commission
 Rule 100 contains definitions of terms under Regulation M
 Rule 101 governs the activities of underwriters and other persons participating in a
distribution of securities and their affiliated purchasers
 Rule 102 governs the activities of the issuer, selling security holders and their
affiliated purchasers
 Rule 103 describes the conditions for permissible “passive” market making during
the restricted period for a distribution of a Nasdaq security.
 Rule 104 governs stabilization, syndicate short covering activity, and penalty bids
 Rule 105 prohibits covering short sales with offered securities purchased from an
underwriter, broker, or dealer participating in an offering.
 Since Regulation M’s adoption in 1996, the Commission has examined underwriting
practices and aftermarket activities. In recent years, anti-manipulation regulation has
been extensively and intensively scrutinized, with a particular focus on initial public
offerings (“IPOs”
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 10 Red Flags That an Unregistered Offering May
Be a Scam
 Claims of High Returns with Little or No Risk
 Unregistered Investment Professionals
 Aggressive Sales Tactics
 Problems with Sales Documents
 No Net Worth or Income Requirements
 Accredited investor. An individual is considered an accredited investor, if he or she: earned
income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two
years, and reasonably expects the same for the current year, OR
 has a net worth over $1 million, either alone or together with a spouse (excluding the value of
the person’s primary residence or any loans secured by the residence (up to the value of the
residence)).

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 No One Else Seems to be Involved
 Sham or Virtual Offices
 Not in Good Standing
 Unsolicited Investment Offers
 Suspicious or Unverifiable Biographies of Managers or
Promoters
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 What You Can Do to Help Protect Yourself
 Check the background of the investment professional.
 Understand the Investment Strategy
 Be Aware of Tactics of Con Artists and Fraudsters
 Ask Questions
 Additional Resources Available on SEC.gov
For basic investment guidance, see our publication, Ask Questions.
For guidance on choosing an investment professional, review our Investor
Bulletin, Top Tips for Selecting a Financial Professional.
To learn more about unregistered securities offerings, read:
Investor Alert: Advertising for Unregistered Securities Offerings
 Regulation D Offerings
 Investor Bulletin: Accredited Investors
 Investor Alert: Private Oil and Gas Offerings
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 Learning Objectives:
 Examine key information about the characteristics of
securities, securities markets, and securities fraud
 Demonstrate knowledge about the history of, and
basic concepts underlying, financial markets and
investment securities
 Recall key information about the development of
securities regulation in the United States
 Recognize securities fraud schemes that financial
institutions or organizations commit against investors
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 Identify the different types of securities fraud schemes
that financial advisors or employees commit against
financial organizations
 Recognize the ways investors commit securities fraud
schemes against financial organizations
 Identify securities fraud schemes that financial
advisors commit against investors
 Investigate incidences of securities fraud and report
the results of such efforts
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 Who Will Benefit:
 Bank and financial institution auditors
 Controllers and corporate managers
 Forensic and management accountants, accounts
payable and financial analysts
 Governance, risk management and compliance officers
 Internal and external auditors, CPAs and CAs
 Certified fraud examiners and other anti-fraud
professionals
 Securities Attorneys
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THANK YOU FOR YOUR ATTENTION
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