NASD Notice to Members 04-13 - February 2004

SEC Approves Amendments to Rule 2710 (Corporate Financing Rule) and Rule 2720 (Distribution of Securities of Members and Affiliates-Conflicts of Interest); Effective Date: March 22, 2004

Executive Summary

On December 23, 2003, the Securities and Exchange Commission (SEC) approved amendments to Rule 2710 (Corporate Financing Rule or Rule) and Rule 2720 (Distribution of Securities of Members and Affiliates-Conflicts of Interest Rule) that modernize and simplify the Rules to better reflect the various financial activities of multi-service firms (Rule Amendments).1 The Corporate Financing Rule regulates underwriting compensation and prohibits unfair arrangements in connection with public offerings of securities. The Rule requires members to file with NASD information about initial public offerings (IPOs) and certain secondary offerings. The Corporate Financing Department (Department) reviews this information prior to commencement of the offering to determine whether the underwriting compensation and other terms and arrangements meet the requirements of applicable NASD rules.

 

Questions regarding the Notice may be directed to Minh Le or Joani Ward, Assistant Supervisors, Corporate Financing Department, NASD, at (240) 386-4623.