A. Any transaction of purchase and sale, or sale and purchase, of a security which is effected in connection with the distribution of a substantial block of securities shall be exempt from the provisions of Insurance Article, §3-119(e), Annotated Code of Maryland, to the extent specified in this chapter, as not comprehended within the purpose of Insurance Article, §3-119(e), upon the following conditions:
(1) The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of this business, in the distribution of the block of securities;
(2) The security involved in the transaction is:
(a) A part of the block of securities and is acquired by the person effecting the transaction, with a view to distribution thereof, from the issuer or other person on whose behalf the securities are being distributed or from a person who is participating in good faith in the distribution of the block of securities; or
(b) A security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with the distribution: and
(3) Other persons not within the purview of Insurance Article, §3-119(e), Annotated Code of Maryland, are participating in the distribution of the block of securities on terms at least as favorable as those on which the person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of Insurance Article, §3-119(e), by this section of this regulation. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing these functions may not preclude an exemption which would otherwise be available under this section of this regulation.
B. The exemption of a transaction pursuant to this regulation with respect to the participation therein of one party thereto may not render the transaction exempt with respect to participation of any other party therein unless the other party also meets the conditions of this regulation.