Corporate & Securities Law

By Jim Hamilton

SEC Approves FINRA Rule 5122 re Private Placements of Securities Issued by Members

The SEC approved FINRA's proposal to adopt new FINRA Rule 5122, that will require a member offering or selling any security in a private placement issued by the member or a "control entity" to:

(1) disclose to investors in a private placement memorandum, term sheet or other offering document the intended use of offering proceeds and the offering expenses;

(2) file the offering document with FINRA; and

(3) commit that at least 85% of the offering proceeds will be used for business purposes, that will not include offering costs, discounts, commissions and any other cash or non-cash sales incentives.

FINRA Rule 5122 will take effect 30 days following publication of a FINRA Regulatory Notice announcing the date, with the notice to be published no later than 60 days following SEC approval.

For the text of FINRA Rule 5122, please see:

http://www.finra.org/Industry/Regulation/RuleFilings/2008/P039132

Full post as published by Jim Hamilton's World of Securities Regulation on March 23, 2009 (boomark / email).