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FINRA Issues Regulatory Notice Regarding Amendments to its Corporate Financing Rule

On March 20, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 20-20 regarding recent amendments to FINRA Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements), which requires member firms participating in a public offering to file certain documents and information with FINRA regarding the underwriting terms arrangements. The amendments to Rule 5110 reorganize and improve the readability of the rule, including specific revisions to the following areas: 1) filing requirements; 2) filing requirements for shelf offerings; 3) exemptions from filing and substantive requirements; 4) underwriting compensation; 5) venture capital exceptions; 6) treatment of non-convertible or non-exchangeable debt securities and derivatives; 7) lock-up restrictions; 8) prohibited terms and arrangements; and 9) defined terms.

The implementation date for amended Rule 5110(a)(3)(A), (a)(4)(A)(ii) and (a)(4)(A)(iii) was March 20, 2020. The implementation date for all other provisions in amended Rule 5110 is September 16, 2020.

For more information on the amendments to Rule 5110, please see the January 17, 2020 edition of Corporation & Financial Weekly Digest.

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About this Author

Susan Light, Katten Law Firm, Finance Law Attorney, New York
Partner

Susan Light focuses her practice on financial services regulatory matters. She counsels broker-dealers, hedge funds, investment banks and financial services clients on enforcement issues involving the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), other self-regulatory organizations (SROs) and state and federal regulatory authorities. She has particular experience related to sales practice issues, financial and operational issues, anti-money laundering, crowdfunding, cybersecurity, and cryptocurrencies.

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212-940-8599
Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange Commission, the US Commodity Futures Trading Commission and financial industry self-regulatory organizations. 

312-902-5452
Jack West Financial Attorney Katten
Associate

Jack West is an associate in the Financial Markets and Funds practice.

312-902-5463