INVESTMENT BANKING

Funding Portals

Before applying to become a funding portal member, prospective members should fully understand FINRA requirements. FINRA recommends prospective members read this section of FINRA.org thoroughly, as well as FINRA’s Funding Portal Rules and the SEC’s Regulation Crowdfunding.

FINRA Topic Page:  Funding Portals  

Private Placements

(NEW) FINRA Amends Rules 5122 and 5123 Filing Requirements to Include Retail Communications That Promote or Recommend Private Placements

FINRA has adopted changes to FINRA Rules 5122 (Private Placements of Securities Issued by Members) and 5123 (Private Placements of Securities) to require members to file retail communications that promote or recommend private placement offerings that are subject to those rules’ filing requirements. The new filing requirements become effective on October 1, 2021.

FINRA Regulatory Notice 21-26 (July 15, 2021): Private Placement Retail Communications

 

FINRA Updates Private Placement Filer Form Pursuant to FINRA Rules 5122 and 5123

FINRA has updated the form that members must use to file offering documents and information pursuant to FINRA Rules 5122 (Private Placements of Securities Issued by Members) and 5123 (Private Placements of Securities) (Filer Form). The updated Filer Form will be accessible in the FINRA Gateway beginning May 22, 2021, and includes new and updated questions that will facilitate review of the filed material. Beginning on May 22, 2021, members will be required to complete the updated Filer Form for all new filings, as well as for new amendments to filings.

FINRA Regulatory Notice 21-10 (March 11, 2021):Private Placement Filer Form

 

FINRA Provides Guidance on Retail Communications Concerning Private Placement Offerings

This Notice provides guidance to help member firms comply with FINRA Rule 2210, Communications with the Public, when creating, reviewing, approving, distributing, or using retail communications concerning private placement offerings.

FINRA Regulatory Notice 20-21 (July 1, 2020): Communications with the Public

 

 

FINRA Topic Page:  Private Placements

Public Offerings

Corporate Financing

FINRA amended its Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements) to make substantive, organizational and terminology changes to the rule. The amendments to Rule 5110 modernize, simplify and clarify its provisions while maintaining important protections for market participants, including issuers and investors participating in public offerings. The implementation date for amended Rule 5110(a)(3)(A), (a)(4)(A) (ii) and (a)(4)(A)(iii) is March 20, 2020. The implementation date for all other provisions in amended Rule 5110 was September 16, 2020.

FINRA Regulatory Notice 20-10 (March 20, 2020): FINRA Amends the FINRA Corporate Financing Rule

 

Initial Public Offering Rules

FINRA amended FINRA Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) and FINRA Rule 5131 (New Issue Allocations and Distributions) to modify the rules to enhance regulatory consistency and address unintended operational impediments. These changes became effective on January 1, 2020.

FINRA Regulatory Notice 19-37 (December 19, 2019): SEC Approves Amendments to FINRA Rules 5130 and 5131 Relating to Equity IPOs

 

Solicitations of Interest Prior to a Registered Public Offering

The SEC adopted a new communications rule under the Securities Act of 1933 that permits issuers to engage in oral or written communications with certain potential investors, either prior to or following the filing of a registration statement, to determine whether such investors might have an interest in a contemplated registered securities offering. The rule became effective on December 3, 2019.

SEC Release No. 33-10699 (September 25, 2019), 84 FR 53011 (October 4, 2019): Solicitations of Interest Prior to a Registered Public Offering (Final Rule)

 

Regulation A Offerings

FINRA issued guidance regarding the FINRA filing requirements and review procedures that apply to firms that participate in Regulation A+ offerings. Specifically, FINRA’s Corporate Financing Rules require firms that participate in Regulation A+ offerings to file with FINRA information specified in the rules. FINRA’s Communications with the Public Rule and its Suitability Rule also apply to a firm’s participation in these offerings. FINRA also reminds firms that communications with the public concerning a Regulation A+ offering of Direct Participation Program securities must be filed with FINRA.

•  FINRA Regulatory Notice 15-32 (September 2015):  FINRA Filing Requirements and Review of Regulation A Offerings

 

FINRA Topic Page:  Public Offerings

Supervision

Qualifications of Accountants 

The SEC adopted amendments to update certain auditor independence requirements. These amendments are intended to more effectively focus the independence analysis on those relationships or services that are more likely to pose threats to an auditor’s objectivity and impartiality. The amendments became effective on June 9, 2021.

SEC Release No. 33-10876 (October 16, 2020), 85 FR 80508 (December 11, 2020): Qualifications of Accountants (Final Rule)

 

Insider Trading

FINRA Rule 3110 (Supervision) includes a provision to help firms comply with their obligation under Section 15(g) of the Securities Exchange Act of 1934 to have policies and procedures in place reasonably designed to prevent potential insider trading. Rule 3110(d) requires that firms include in their supervisory procedures a process for reviewing securities transactions in certain types of accounts that is reasonably designed to identify trades that may violate insider trading prohibitions. When implementing these policies and procedures, firms may take a risk-based approach to monitoring transactions that takes into account their specific business models, and firms are encouraged to tailor their policies and procedures to their specific business models.

• FINRA Regulatory Notice 14-10 (March 2014):  SEC Approves New Supervision Rules

SEC Fast Answers: Insider Trading

Insider Trading “Red Flags” and Filing a Tip with FINRA