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FINRA Rules to Catch up to JOBS Act

Posted in Research

FINRA has filed with the SEC a proposed rule change to amend FINRA’s rules relating to research in order to bring them in line with the JOBS Act and the SEC Staff’s FAQs addressing research.  The proposed FINRA rule change would modify NASD Rule 2711 and NYSE Rule 472.

Arranging and Participating in Communications:  The proposed rule creates an exception to Rule 2711(c)(4) that permits research analysts to attend meetings with issuer management that are also attended by investment banking personnel, including pitch meetings, provided that the research analysts do not engage in any prohibited conduct, such as soliciting investment banking business.  Rule 472 also would contain a similar exception.

Quiet Periods:  The proposed rule amends NASD 2711 to eliminate the following quiet periods with respect to an IPO of an EGC:  NASD Rule 2711(f)(1)(A) which imposes a 40-day quiet period after an IPO on a member that acts as a manager or co-manager of the IPO; NASD Rule 2711(f)(2) which imposes a 25-day quiet period after an IPO on a member that participates as an underwriter or dealer (other than manager or co-manager) of the IPO; and NASD Rule 2711(f)(4) with respect to the 15-day quiet period applicable to IPO managers and co-managers prior to the expiration, waiver or termination of a lock-up agreement.

FINRA also proposes to adopt changes to NASD Rule 2711(f)(4) to eliminate the 10-day quiet period on managers and co-managers following a secondary offering and the quiet periods after the expiration, waiver or termination of a lock-up agreement for such an offering.