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Tag Archives: FINRA

SEC Approves FINRA’s Funding Portal Rules

Posted in Crowdfunding, FINRA

The SEC approved FINRA’s Funding Portal rules for entities that intend to function as funding portals in crowdfunded offerings made pursuant to Regulation Crowdfunding.   We had previously posted a link to the rule text.  Today, FINRA issued Regulatory Notice 16-06, which provides an overview of the new Funding Portal Rules.  The Regulatory Notice can be… Continue Reading

SEC Proposed Rulemaking Regarding Requirements for Transfer Agents

Posted in FINRA, SEC News, Transfer Agents

Today, the Commission issued an advanced notice of proposed rulemaking (ANPR) for new requirements for transfer agents, together with a concept release requesting public comment on the Commission’s broader review of transfer agent regulation. Over the course of the last year, various Commissioners, including Commissioner Aguilar, had noted that the Commission’s regulation of transfer agents… Continue Reading

SEC Announces Order for Tick Size Pilot Plan

Posted in SEC News

On June 25, 2014, the Securities and Exchange Commission (the “SEC”) announced that it had ordered the national securities exchanges and the Financial Industry Regulatory Authority, Inc. (“FINRA”) to act jointly to develop and file with the SEC a national market system plan to implement a targeted 12 month pilot program that will widen minimum… Continue Reading

Pre-IPO Selling Procedures Need to Be Adequately Supervised, According to FINRA

Posted in IPO On-Ramp

Broker-dealers selling interests in IPOs need to have adequate supervisory systems to ensure that registered representatives do not make actual sales before the securities are registered, according to a settlement of a formal disciplinary proceeding announced by FINRA yesterday. In this particular case, FINRA found that for a little  more than a year, a firm… Continue Reading

Limited Corporate Financing Brokers

Posted in Private Placements

FINRA published Regulatory Notice 14-09 (available:  https://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p449586.pdf) to solicit comments regarding a series of new rules that would be applicable to firms that perform certain limited functions.  FINRA is proposing to establish a new, reduced regulatory framework for firms that advise issuers on debt and equity private placements with institutional investors or provide certain advisory… Continue Reading

FINRA’s Annual Priorities Letter

Posted in IPO On-Ramp

FINRA has released its annual letter highlighting its areas of focus.  Quite a number of the priorities reflect market changes, and reflect FINRA’s focus on developments post-JOBS Act.  For example, the letter notes that given the resurgence of the IPO market, FINRA will review the firm’s due diligence activities, monitor the completeness and accuracy of… Continue Reading

Effective Date for TRACE Dissemination of 144A Data

Posted in SEC News

As we reported in a previous post (http://www.mofojumpstarter.com/2013/09/20/trace-dissemination-of-144a-data/), the SEC approved amendments to FINRA Rules 6750 and 7730, and TRACE dissemination procedures for Rule 144A trade data. FINRA has announced (see: http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p375662.pdf) that these amendments will go into effect beginning June 30, 2014.

FINRA Regulatory Notice on Crowdfunding Portals

Posted in Crowdfunding

Today, FINRA released a regulatory notice with proposed funding portal rules and solicited comments on the seven rules—Funding Portal Rules 100, 110, 200, 300, 800, 900 and 12009—and related forms. The FINRA release is available here:  http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p370743.pdf The proposed regulations are available here:  http://www.finra.org/web/groups/industry/%40ip/%40reg/%40notice/documents/industry/p369763.pdf

FINRA Investor Alert Highlights Private Placement Risks

Posted in Private Placements

FINRA posted today an investor alert that highlights risks relating to private placements.  The alert summarizes the differences between private placements and registered offerings, and underscores FINRA’s concerns about fraud and sales abuse, long holding periods and lack of issuer information.  This alert was issued six days prior to the effectiveness of amendments lifting the… Continue Reading

Reminders for Broker-Dealers Regarding Rule 506 Offerings

Posted in Rule 506

In an earlier post, we commented on some considerations for issuers and their advisers in respect of offerings made in reliance on Rule 506 after September 23, 2013.  Broker-dealers that are serving as financial intermediaries or placement agents in connection with private offerings also should plan ahead and take into account that, with the effective… Continue Reading

How do the SEC “Bad Actor” Disqualifying Events Fit with FINRA Forms U4 and U5?

Posted in Rule 506, SEC News

The new SEC “bad actor” provisions of Rule 506(d) become effective on September 23, 2013.  Investment banks, which monitor FINRA compliance by their professionals, must ensure that their compliance systems capture all the potentially new requirements of Rule 506(d).  The FINRA disclosure obligations of Forms U4 and U5 are more extensive than the Rule 506(d)… Continue Reading

FINRA Updates Private Placement Form

Posted in Private Placements

In its continuing quest to improve member firm due diligence in private placements, thereby enhancing investor protections (See our posts on July 7, July 24 and August 6, 2013), on August 19, 2013, FINRA issued Regulatory Notice 13-26 about the updated Private Placement Form (a copy of which is attached to the Notice) that firms… Continue Reading

FINRA Actions and the Due Diligence Obligations of Broker-Dealers in Private Placements

Posted in Private Placements

Private placements and the due diligence obligations of broker-dealers in such transactions have recently come under increased scrutiny from FINRA as part of a broader trend reflected most notably in the filing requirements for private placements that went into effect on December 3, 2012 (FINRA Rule 5123). This trend of increased scrutiny also is likely… Continue Reading

FINRA Cracks Down on Private Placements

Posted in Private Placements, Rule 506

Earlier this year, FINRA announced that the policing of private placements would be its regulatory priority for 2013.  However, FINRA enforcement actions relating to private placements have been dramatically increasing since 2010, as the chart below indicates. With the adoption of FINRA Rule 5123 (requiring broker-dealers to file with FINRA copies of offering documents used… Continue Reading

Advertising Restrictions Apply to Commodity Pools

Posted in Rule 506

In prior posts, we have noted that the relaxation of the ban on general solicitation in no way relieves certain registered entities of their obligations to comply with regulations related to advertising or promotional materials.  In fact, relying on general solicitation will create new compliance hurdles for registered entities.  For example, registered broker-dealers must comply… Continue Reading

Before You Start That General Solicitation…

Posted in Private Placements, Rule 506

This week, the SEC approved long-awaited amendments relaxing the prohibition against general solicitation, as required under Title II of the JOBS Act.  These amendments will liberalize the ability of broker-dealers to advertise and market private placements by removing the prohibition against general solicitation in offerings conducted pursuant to new Rule 506(c).  However, following the effective… Continue Reading

FINRA to Consider Request for Comment on Crowdfunding

Posted in Crowdfunding

In its upcoming July 11th meeting, FINRA will consider a proposal to solicit comment via Regulatory Notice on proposed rules and related forms governing funding portals pursuant to Title III of the JOBS Act.   See the FINRA release:  http://www.finra.org/Industry/Regulation/Guidance/CommunicationstoFirms/P292644.

FINRA Rule 5123 Amendment

Posted in Private Placements

On June 20, 2013, FINRA filed an immediately effective amendment to Rule 5123, Private Placements of Securities, to codify the requirement that members provide the required information by using the electronic Private Placement Form and filing it via FINRA Firm Gateway (see FINRA Regulatory Notice 12-40). FINRA also proposed, effective immediately, that the Form include additional due-diligence information, to… Continue Reading

Easier to Communicate? Remember FINRA’s Communications Rules

Posted in Communications

FINRA’s sweeping overhaul of its rules governing communications with the public become effective today.  The new rules and guidance, which the SEC approved last year, are likely to keep compliance officers busy for quite some time. The revisions simplify some rules, but also create new compliance challenges.  Most significant, FINRA reduced the number of categories… Continue Reading

FINRA Updates Private Placement Filing Requirements FAQs

Posted in Private Placements

FINRA recently posted two updates to its Private Placement Filing Requirements FAQs. http://www.finra.org/Industry/Compliance/RegulatoryFilings/PrivatePlacements/FAQ/index.htm?utm_source=MM&utm_medium=email&utm_campaign=Weekly_Update_012313_FINAL#1-4. In the first update, FINRA clarified that the Rule 5123 filing obligation applies to private placements to any individual accredited investor, which includes officers, directors and general partners of the issuer (Rule 510(a)(4)) and entities in which all the equity owners are… Continue Reading

FINRA Launches Funding Portal Form

Posted in Crowdfunding

As we noted, last month FINRA’s Board of Governors authorized FINRA to issue an interim form to seek essential information from prospective funding portals intending to apply for membership with FINRA pursuant to the JOBS Act.  FINRA has now announced the availability of the Interim Form for Funding Portals (“IFFP”), which is an online form… Continue Reading

FINRA Authorized to Use Interim Form for Funding Portals

Posted in Crowdfunding

In a recent update regarding the last meeting of the FINRA Board of Governors (see http://www.finra.org/Industry/Regulation/Guidance/CommunicationstoFirms/P197425), FINRA noted that the Board had authorized FINRA to  issue an interim form to seek essential information from prospective funding portals intending to apply for membership with FINRA pursuant to the JOBS Act.  Funding portals would file the interim… Continue Reading