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.