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Corporate Financing

The Corporate Financing Department assists FINRA-regulated firms in complying with FINRA rules and federal securities laws by reviewing documents related to firms’ capital-raising activities, including securities offering documents and underwriting and other distribution arrangements. These services provide protections to investors and issuers by regulating underwriting terms and arrangements and addressing conflicts of interest when underwriters are affiliated with an issuer or receive significant portions of the proceeds in an offering.

FINRA's Corporate Financing Department reviews public and private securities offerings in which FINRA firms will participate. FINRA's review of public offerings complements the SEC’s registration process for issuers and provides firms with guidance on fair and reasonable underwriting arrangements.  The private placements review program provides added regulatory oversight when firms participate in offerings of unregistered securities to individual investors.

Corporate Financing also provides general annual statistics on the number of regulatory filings submitted for issuers accessing the public or private capital markets. 

FINRA Corporate Financing Rules

The following FINRA rules regulate firms in public offerings of securities.

  • Rule 5110: Corporate Financing Rule – Underwriting Terms and Arrangements. This rule regulates compensation to firms and associated persons participating in public offerings.
  • Rule 5121: Public Offerings of Securities with Conflicts of Interest. This rule regulates firms and associated persons in the distribution of equity and debt offerings if a conflict of interest arises.
  • Rule 2310: Direct Participation Programs. This applies to direct participation program offerings and states that underwriting compensation from any source may not exceed FINRA guidelines.
  • Rule 5130: Restrictions on the Purchase and Sale of Initial Equity Public Offerings. This rule protects the integrity of the public offering process by prohibiting the sale of new issues to, or purchases of new issues by, specified persons.

The following FINRA rules regulate firms in private placements of securities.

  • Rule 5122: Private Placement of Securities Issued by Members. This covers certain disclosure and filing requirements of firms and associated persons in the private placement of the firm’s own securities.
  • Rule 5123: Private Placement of Securities. This rule regulates the filing with FINRA of private placement memorandums, term sheets or other offering documents.
FINRA Updates Form for Filing Private Placements of Securities Pursuant to FINRA Rules 5122 and 5123
August 19, 2013
SEC Approves New FINRA Rule 5123 Regarding Private Placements of Securities
September 5, 2012
New Electronic Filing System for Public Offering Filings
April 30, 2012
Obligation of Broker-Dealers to Conduct Reasonable Investigations in Regulation D Offerings
April 20, 2010
SEC Approves New FINRA Rule 5122 Relating to Private Placements of Securities Issued by a Member Firm or a Control Entity
May 18, 2009
FAQ
FINRA Rule 5131 (New Issue Allocations and Distributions) addresses potential misconduct in the allocation and distribution of new issues.
January 29, 2016
FAQ
Frequently asked questions about private placements.