FINRA Capital Formation Review
On Apr. 12, FINRA proposed rules on capital, underwriting, research.
- Consulted on rules relating to participation of member firms in capital-raising process.
- Part of efforts to modernize regulation of activity, while maintain investor protections.
- Under new FINRA360 initiative to evaluate various aspects of operations and programs.
- FINRA issued three regulatory notices, on rules relating to capital formation activities.
- Capital Formation Notice 17-14
- Sought comment on functioning of rules that directly relate to capital-raising process.
- Rules include underwriting public offerings, advising on capital raising, restructurings.
- Placement agents for sale of unregistered securities, funding portals, research reports.
- Included recent rule additions, covering capital acquisition brokers and funding portals.
- Asked of unintended consequences arising from rules related to capital-raising process.
- Underwriting Notice 17-15
- Proposal is intended to modernize FINRA Rule 5110, and simplify and clarify provisions.
- Retain principle that firm or associate not participate in public offering if unfair terms.
- Or where terms, conditions, compensation, unreasonable or inconsistent to FINRA rules.
- Research Harbor Notice 17-16
- Amended Rule 2241 on research analysts, reports, Rule 2242 on debt research analysts.
- To create a safe harbor for a brief, written analysis distributed to institutional investors,
by a sales or principal trader, but may rise to level of research report/desk commentary.
- Safe harbor conditions compliance with provisions to mitigate research-related conflicts.
- Require health warning on commentary and obtain investor negative consent to receive.
- Comments on all three notices requested by May 30, 2017, before further actions taken.
||Capital RN 17-14, PR, 4/12/2017; Underwriting RN 17-15, 4/12/2017, Rule 5110; Research RN 17-16, 4/12/2017, Rule 2241, Rule 2242; JOBS
||Trading; Research; Advertising; Compliance; Financial; Legal; Operations; Registration; Reporting
||United States of America
||Equity; Fixed Income; Investment Bank; Issuance/IPO; Securities
Last substantive update on 04/12/2017