FINRA Proposes Rule Making Substantive, Organizational and Terminology Changes to the Corporate Financing Rule
On April 11, the Financial Industry Regulatory Authority filed with the Securities and Exchange Commission a proposed rule change to make certain substantive, organizational and terminology changes to FINRA Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements), which requires member firms that participate in a public offering to file documents and information with FINRA about the underwriting terms and arrangements.
The proposed rule change includes a range of amendments to Rule 5110, including reorganizing and improving its readability. In addition, FINRA proposes changes 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. These changes are intended to lessen the regulatory costs and burdens incurred when complying with the Rule.
If the SEC approves the rule change, FINRA will announce the implementation date in a Regulatory Notice to be published no later than 90 days following such approval. The implementation date will be no later than 180 days following publication of the Regulatory Notice announcing the SEC’s approval.
The text of the rule change is available here.