NASD Notice to Members 07-27 - June 2007

NASD Requests Comment on Proposed Rule 2721 to Regulate Member Private Securities Offerings; Comment Period Expires July 20, 2007

Executive Summary

NASD is issuing this Notice to Members to solicit comments from members and other interested parties on proposed Rule 2721 pertaining to private placements of unregistered securities issued by a member (Member Private Offerings or MPOs), which would require that:

  • a private placement memorandum (PPM) be provided to each investor with information regarding risk factors, intended use of proceeds, offering expenses and any other information necessary to ensure that required information is not misleading;

  • the PPM be filed with NASD’s Corporate Financing Department at or prior to the time it is provided to any investor; and

  • at least 85 percent of the offering proceeds be used for the business purposes identified under the "use of proceeds" disclosure in the PPM.

Rule 2721 is proposed in response to problems NASD has identified in connection with the private offerings of members’ securities or those of a control entity. The proposed Rule also contains several exemptions for offerings to certain types of institutional investors, offerings under various provisions of the federal securities laws for which NASD believes the protections of the proposed rule are not necessary, and offerings in which investors otherwise would be expected to have access to sufficient information about the issuer.

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The views, expressions, findings and opinions expressed in the comments on this Web page are solely those of the author(s) and FINRA accepts no responsibility for the content of the comments.

Comments By Date Received
LEC Investment Corp. (PDF 48 KB) 6/18/2007
New York City Bar Committee on Futures and Derivatives Regulation (PDF 242 KB) 7/10/2007
Todd Anders (PDF 35 KB) 7/13/2007
ChoiceTrade (PDF 37 KB) 7/19/2007
Mallon & Johnson, P.C. (PDF 259 KB) 7/19/2007
Stephens Inc. (PDF 35 KB) 7/20/2007
Lombard Securities Incorporated (PDF 34 KB) 7/20/2007
Plexus Consulting (PDF 36 KB) 7/20/2007
Managed Funds Association (PDF 45 KB) 7/20/2007
MGL Consulting Corporation (PDF 38 KB) 7/20/2007
Committee of Annuity Insurers (PDF 228 KB) 7/20/2007
PFG Distribution Company (PDF 275 KB) 7/20/2007
Alston & Bird LLP (PDF 99 KB) 7/20/2007
National Futures Association (PDF 27 KB) 7/20/2007
American Bar Association Committee on Federal Regulation of Securities (PDF 73 KB) 7/23/2007