On September 18, the Securities and Exchange Commission issued an emergency order to temporarily amend Rule 10b-18 of the Securities Exchange Act of 1934 in response to the potential of sudden and excessive fluctuations of securities prices and disruption in the functioning of the securities markets. Generally, Rule 10b-18 of the Exchange Act provides issuers with a safe harbor to effect repurchases of securities within certain conditions.

The emergency order temporarily amends Rule 10b-18 of the Exchange Act as follows: 

  • Suspends the requirements of Rule 10b-18(b)(2)(i) which states that a Rule 10b-18 purchase must not be the opening (regular way) purchase reported in the consolidated system; 
  • Suspends the requirements of Rule 10b-18(b)(2)(ii) which states that a Rule 10b-18 purchase must not be effected during the 10 minutes before the scheduled close of the primary trading session in the principal market for the security, or the 10 minutes before the scheduled close of the primary trading session in the market where the purchase is effected, for a security that has value equal to the average daily trading volume for the security during the four calendar weeks preceding the week in which the Rule 10b-18 purchase is to be effected (ADTV) of $1 million or more, and a public float value of $150 million or more; 
  • Suspends the requirements of Rule 10b-18(b)(2)(iii) which statesthat a Rule 10b-18 purchase must not be effected during the 30 minutes before the scheduled close of the primary trading session in the principal market for the security, and the 30 minutes before the scheduled close of the primary trading session in the market where the purchase is effected, for all other securities; and 
  • Amends the requirements of Rule 10b-18(b)(4) so that the total volumeof the Rule 10b-18 purchase of a security on any single day may not exceed 100% of the ADTV for the security.

The emergency order became effective at 12:01 a.m. EDT on September 19 and will terminate at 11:59 p.m. on October 2 unless it is further extended by the SEC.

http://www.sec.gov/rules/other/2008/34-58588.pdf