Corporate & Securities Law

By Jim Hamilton

FINRA Adopts Member Private Offering Rule

The Financial Industry Regulatory Authority's (FINRA) Rule 5122 regulating private offerings of securities issued by a FINRA member on the member's "control entity" ( a "Member Private Offering") takes effect June 17, 2009.

Rule 5122 prohibits any FINRA member and its associated persons from participating in a Member Private Offering unless the member issuing the Member Private Offering:

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

(2) files the offering document with FINRA; and

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

For the full text of the adopted rule, please see

http://www.sec.gov/rules/sro/finra/2009/34-59599.pdf

Full post as published by Jim Hamilton's World of Securities Regulation on May 20, 2009 (boomark / email).