Which group is considered an exception to the IPO investing restrictions?

The correct answer identifies accounts with less than 10% ownership by restricted persons as an exception to IPO investing restrictions. In the context of initial public offerings (IPOs), certain individuals and entities, often referred to as "restricted persons," face limitations on their ability to purchase shares in the offering. These restrictions aim to prevent conflicts of interest and ensure fair access to investment opportunities for all investors.

When an account has less than 10% ownership by restricted persons, it signifies that the influence of these individuals is minimal enough not to warrant the same level of restrictions imposed on accounts that are significantly controlled by them. This rule is designed to encourage participation from a broader base of investors while maintaining the integrity of the IPO process. Thus, accounts that meet this criterion can freely invest in IPOs without running afoul of the restrictions that apply to accounts significantly controlled by restricted persons, such as company executives or underwriters.

Understanding these exemptions is critical for compliance and risk management within the investment banking sector, as they allow firms to navigate regulations effectively while still engaging with potential investors.