What rules govern the buying and selling of distressed securities?

The buying and selling of distressed securities in Washington is regulated by the Washington State Corporations and Offshore Securities Alternative Investment Law. This law establishes the rules, restrictions, and definitions governing the buying and selling of distressed securities, including the permissible activities of securities dealers, brokers, and associated persons. Under the law, all purchases and sales of distressed securities must be done with the "knowledge and agreement" of the parties and must be made openly and on the open market. The law also states that a purchase or sale of distressed securities must be done in accordance with terms set out in an applicable contract and that all parties must act honestly, in good faith, and in accordance with the laws of the state. The law also permits individuals and entities to purchase distressed securities without pre-qualification, unless the securities are restricted or the issuer is not qualified to do business in Washington state. However, the securities must still be registered with the Washington State Department of Financial Institutions and must meet other statutory criteria. The sale of distressed securities must also meet all applicable requirements, including disclosure, minimum pricing, and due diligence requirements. Finally, the sale of distressed securities must also include a "safe harbor" provision which prohibits the seller from being liable for any misstatements or omissions unless the seller knew or should have known that the information was false or misleading.

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