Financial Industry Regulatory Authority, Inc. (“FINRA”) Rules 5122 (private placements of securities issued by member firms) and 5123 (private placements of securities) each require a FINRA member to file with the FINRA advertising department any private placement memorandum, term sheet or other offering document that discloses the intended use of the offering proceeds, the offering
FINRA
Upcoming Regulation Best Interest SEC Roundtable
The Securities and Exchange Commission will hold a roundtable discussion on October 26, 2020 that will focus on Regulation Best Interest and Form CRS. The roundtable will discuss initial observations regarding implementation. The published agenda, which is available here, includes various members of the SEC and FINRA staffs. Interpretative questions may be submitted in…
FINRA CEO Comments Suggest Reconsideration of On-Site Exams in Light of COVID-19
In statements made at SIFMA’s Virtual Compliance and Legal Forum, FINRA Chief Executive Officer, Robert Cook, indicated that FINRA may be reconsidering aspects of its cycle examinations in light of the challenges presented by the COVID-19 pandemic. FINRA conducts between 1,500 and 2,000 risk-based cycle examinations annually to assess identified risks and controls and determine…
IPO Underpricing & Behavioral Theories
In a law journal note titled “The Seller’s Curse and the Underwriter’s Pricing Pivot: A Behavioral Theory of IPO Pricing,” author Patrick Corrigan considers various theories advanced to explain IPO underpricing. Given that so many venture and private equity investors are finding alternatives to the traditional IPO model, whether through direct listings or…
FINRA Guidance on Amended Corporate Financing Rule 5110
FINRA recently posted Frequently Asked Questions (FAQ) about amended Rule 5110, which address filing requirements; shelf offerings; definitions; and fees and compensation to foreign affiliates. The FAQs may be accessed here.
SEC Announces Reg BI Roundtable
The Securities and Exchange Commission announced that it will hold a roundtable on October 26, 2020 during which the SEC staff and the FINRA staff will discuss their initial observations on Regulation Best Interest and Form CRS implementation. The roundtable will include representatives from the SEC’s Office of Compliance Inspections and Examinations, Division of Trading…
Legal Update: Corporate Financing Rule Change (FINRA Rule 5110)
The Financial Industry Regulatory Authority, Inc. (“FINRA”) recently released Regulatory Notice 20-10, which discusses the recent changes to Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements) (the “Rule”), the main FINRA rule regarding compensation in securities offerings.
Read our Legal Update here.
FINRA Rule 5110 Corporate Financing Rule
FINRA released Regulatory Notice 20-10, which discusses the changes to modernize the Corporate Financing Rule. The implementation date is bifurcated with implementation for Rule 5110(a)(3)(A), (a)(4)(A)(ii) and (a)(4)(A)(iii) effective as of March 20, 2020 and implementation of the rest of the rule on September 16, 2020.
See the Regulatory Notice here.
The new rule…
Legal Update: COVID-19: FINRA Addresses U.S. Broker-Dealer Preparedness and Regulatory Relief in Regulatory Notice 20-08
On March 9, 2020, the Financial Industry Regulatory Authority (FINRA) published Regulatory Notice 20-08 (Notice) with respect to business continuity planning in connection with the recent coronavirus (COVID-19) outbreak. The Notice offers guidance on preparing for potential pandemic-related risks and provides regulatory relief from certain requirements in light of COVID-19.
Read our full Legal Update
FINRA Examination Priorities
FINRA’s 2020 Risk Monitoring and Examination Priorities Letter identifies a number of areas of focus for the examination program in the coming year. Here we highlight particular areas of focus for capital markets practitioners:
- Private placement retail communications and online distribution platforms: FINRA will review how member firms use social media and other platforms in
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