FINRA Comment Letter – Rule 5122 Member Participation in Private Placements

FINRA Comment Letter – Rule 5122 Member Participation in Private Placements

On January 11, 2011, the Financial Industry Regulatory Authority (FINRA) published Regulatory Notice 11-04 (Regulatory Notice) seeking comments on its proposal to amend its rules governing member participation in private placements through a proposed amendment to FINRA Rule 5122 (Proposed Rule Amendment”). As stated by FINRA in the Regulatory Notice, the Proposed Rule Amendment is meant to provide investors with additional protection from fraud and abuse, by expanding Rule 5122 to reach all private placements in which a member firm participates-not just those in which the member firm (or its control entity) is the issuer.

While we believe that the intent of the rule as set forth in the Regulatory Notice is honorable, we also believe that the sponsors and issuers of private placements are already subject to federal and state regulations, and as a result, a number of our clients have expressed numerous concerns that are discussed…

View FINRA Regulatory Notice 11-04