FINRA filed with the Securities and Exchange Commission (SEC) proposed amendments to the private placement filer form that members complete in connection with private placement filings made pursuant to either Rule 5122 or Rule 5123.  The proposed changes to the filer form are proposed for immediate effectiveness, with an anticipated implementation date of May 22, 2021.  The filer form is proposed to be amended to request additional detail regarding the member’s disciplinary history, the issuer’s intended use of proceeds, and details regarding contingencies in contingency offerings, as discussed below:

  • Contingency offerings: FINRA notes that members do not provide sufficient information regarding contingency offerings.  The filer form adds three additional questions for a contingency offering: (1) a request for the member to provide the date by which contingency must be met; (2) a question asking if there have been any changes to the original terms of the contingency during the course of the offering (e.g., extension of the date by which the contingency must be met); and (3) a question regarding whether the subscription process involves the member firm receiving or transmitting investor funds in the offering.
  • Disciplinary history: Currently, the form asks whether the issuer, any officer, director or executive management of the issuer, sponsor, general partner, manager, advisor, or any of the issuer’s affiliates has been the subject of SEC, FINRA or state disciplinary actions or proceedings or criminal complaints within the last 10 years; and the proposed revisions would also inquire about other federal agency disciplinary actions within the last 10 years.
  • Use of proceeds: Would be revised to ask for additional details of the issuer’s use of the offering proceeds.

See the FINRA rule filing here.