Empty head and pure heart test

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Empty head and pure heart test

Securities and Exchange Commission rule that allows only the bidder of a tender offer to trade in the stock while possessing inside information.

Empty Head and Pure Heart Test

An SEC rule stating that under most circumstances, the only investor allowed to trade with insider information is one who is making a tender offer, which is an offer to buy shares in a company directly from shareholders at a price well in excess of its market value. The empty head and pure heart test is governed by Rule 14e-3b.