Update: FINRA Board of Governors Meeting
February 14, 2013
Dear Executive Representative:
The FINRA Board of Governors met this week to discuss a number of issues, including several rulemaking items. A summary of the rule proposals, as approved by the Board, is included below and on our website.
As always, your comments and thoughts are welcome.
Richard G. Ketchum
Chairman and CEO
The Board authorized FINRA to file with the SEC proposed amendments to Rules 5110 (Corporate Financing Rule—Underwriting Terms and Arrangements) and 5121 (Public Offerings of Securities With Conflicts of Interest) to refine the scope of the rules. Specifically, the amendments would (1) narrow the definition of "participation or participating in a public offering" for purposes of triggering certain obligations under the rule; (2) modify the lock-up restrictions to exclude certain securities acquired in an exercise, conversion or stock split during 180 days prior to the filing of a registration statement; (3) clarify that disclosure of member affiliations or associations applies only to relationships involving a participating member; and (4) revise the scope of the definition of "affiliate" to exclude subordinated debt ownership.
Margin Requirements for Security-Based Equity Swaps
The Board authorized FINRA to publish a Regulatory Notice soliciting comment on proposed new FINRA Rule 4241 regarding margin requirements for equity swaps that are security-based swaps (referred to as SBES). FINRA will publish the Regulatory Notice after the SEC takes action on its recently proposed capital, margin and segregation rules for security-based swap dealers and major security-based swap participants. The Regulatory Notice will seek comment on, among other things, proposed provisions in the rule that would address margin requirements for cleared SBES and for non-cleared SBES.
The Board authorized FINRA to publish a Regulatory Notice soliciting comment on the proposed consolidated FINRA membership rules. The revised proposal includes changes in response to comments on the prior proposal set forth in Regulatory Notice 10-01. The proposal also includes additional rule provisions to address regulatory issues identified by the staff and to codify existing membership-related interpretations and practices, thereby promoting understanding of the membership process.
Private Placement Filings
The Board authorized FINRA to file a proposal with the SEC that would enhance the information member firms submit as part of private placement filings, including additional information regarding the type of offering, the issuer and issuer management.