FINRA amends Corporate Financing Rule and Conflict of Interest Rule
By Andrew D Ledbetter and Christopher C Paci
The Securities and Exchange Commission (SEC) recently approved amendments proposed by FINRA, the securities self-regulatory organisation whose members are broker-dealers registered with the SEC, to two of its rules that are critical in the public offering process.
FINRA Rule 5110 (the Corporate Financing Rule) generally regulates underwriting compensation and prohibits unfair arrangements in connection with the public offering of securities. Among other provisions, the rule requires members to file information with FINRA about the securities offerings in which they ‘participate’ and to disclose affiliations and other relationships that may indicate the existence of conflicts of interest. The rule also imposes lock-up restrictions on certain securities acquired from the issuer by a member participating in an offering and restricts the receipt of certain items of value, such as termination or ‘tail’ fees and rights of first refusal as to future transactions (ROFRs). In addition, FINRA Rule 5121 (the Conflict of Interest Rule) prohibits FINRA members that have a ‘conflict of interest’ from participating in a public offering of securities unless certain conditions are met.
The SEC approved amendments to these two FINRA rules that simplify member participation in offerings and associated reporting, while enabling members to negotiate more broadly for tail fees and ROFRs, as follows…
Click on the link below to read the rest of the DLA Piper briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from DLA Piper
News from The Lawyer
Briefings from DLA Piper
A well-known British performing artist was granted permission to take his case to the Supreme Court, where he will appeal the Court of Appeal’s decision in OPO v MLA & STL.
The increased focus of national data protection authorities on the processing of personal data through mobile apps was again confirmed in an open letter from a group of data protection authorities.
Analysis from The Lawyer
Regulators are ramping up the pressure in the aftermath of recession, leaving firms to compete for compliance and restructuring work
Shearman & Sterling is making its presence felt in the City, squaring up to magic circle firms and looking to muscle in on key relationships. Private equity house Bridgepoint is one outfit that has had its head turned by the US firm.