FINRA Proposes Expanding Exemption for Business Development Companies

June 18, 2025

Features

  • FINRA Proposes Expanding Exemption for Business Development Companies 
    In response to comments, FINRA has amended our recent proposal to exempt business development companies (BDCs) from FINRA Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) and from paragraph (b) (Spinning) of FINRA Rule 5131 (New Issue Allocations and Distributions). The proposed exemption, as amended, would apply to all BDCs, provided the BDC is not formed or maintained for the specific purpose of permitting restricted persons to invest in new issues. This proposal was originally filed with the SEC on March 20. 
     
  • Small Firm Briefing: FINRA Forward   
    FINRA President and CEO Robert Cook will join Kayte Toczylowski, Head of Member Relations and Education, on June 30, from 4:30-5 PM, for a conversation on FINRA Forward, a series of initiatives to modernize rules, empower member firm compliance, and combat cyber and fraud risks. Small firms will learn what they can expect next and how to continue to provide feedback. Please register here. 
     
  • New Podcast: Robert Cook on FINRA Forward, and More 
    The latest episode of the FINRA Unscripted podcast features highlights from FINRA President and CEO Robert Cook’s wide-ranging conversation with Kayte Toczylowski, Head of Member Relations and Education, at last month’s annual conference. Cook discussed the vision of FINRA Forward, and emphasized that FINRA’s engagement with our members will be critical to the effort’s success. 

    "The role that we can play, the value that we can add, is really by enabling our member firms to better serve investors,” Cook said. “And I think we want to bring that prism to how we think about some of the initiatives that we're bringing forward, recognize the value that the members provide our economy, our country, and recognize that we can help support that.” 
     
  • Investor Insights on Online Trading and Market Timing 
    Here are two new Investor Insights on timely topics. Firms are welcome to share them and other Investor Insights with customers.  
     
    • Misconceptions about online trading persist despite the growing popularity of investing apps. This Investor Insight answers six common questions about trading through computers and smartphones.  
       
    • The investment strategy known as market timing may not be appropriate for everyone. Read this article to learn about some of the risks.
Regulatory Information, Upcoming Deadlines, Effective Dates
New
Reminders
  • FINRA Files Amendments Relating to Immediately Effective FINRA Sanctions and Actions: FINRA proposed amending our rules relating to certain sanctions and regulatory measures that may take effect immediately. The proposed amendments would provide FINRA staff and adjudicators authority to grant respondents and applicants, where appropriate, the opportunity to seek a stay from the SEC or take other appropriate action when faced with an immediately effective sanction or other regulatory measure. These rule changes will be implemented on July 4. 
     
  • FINRA Forward: FINRA’s latest initiatives to support members, markets, and investors.  
     
    • Capital Formation: Regulatory Notice 25-06 requests comment on modernizing FINRA rules, guidance and processes to further facilitate capital formation and reduce unnecessary regulatory costs and burdens impacting the capital-raising process. Comments are due today, June 18. 
       
    • FINRA Proposes Amending its Capital Acquisition Broker Rules: FINRA filed a proposal to amend our Capital Acquisition Broker (CAB) rules. Among other changes, the proposal would allow CABs to sell newly-issued unregistered securities to eligible employees of issuers and certain of their affiliates; allow CABs, under specified circumstances, to act as intermediaries in connection with secondary transactions of unregistered securities; and permit associated persons of CABs to participate in private securities transactions, subject to FINRA Rule 3280. Comments are due by July 7.  
       
    • FINRA Proposes Raising Gift Limit: FINRA filed a proposal with the SEC to increase the limit on gifts its members can give to employees of an institutional customer, vendor, or counterparty. Comments are due by July 8. 
       
    • The Modern Workplace: Regulatory Notice 25-07 requests comment on modernizing FINRA rules, guidance and processes for the organization and operation of member workplaces. Comments are due by July 14. 
       
    • FINRA Proposes Modifying Implementation Date of Securities Offering Review Fee Changes: Under the proposed changes, the new Corporate Financing Private Placement Review Fee and the Corporate Financing Public Offering Review Fee increases would be implemented on January 1, 2027, at the previously adopted rates for that year. During the 18-month period from July 1, 2025 through December 31, 2026, FINRA would continue its review of private placements at no charge and of public offerings at the current rate without increase. 
       
    • FINRA Proposes Keeping 15-Minute TRACE Reporting Timeframe:  
      FINRA filed a proposal to maintain the current requirement that members report transactions to TRACE as soon as practicable, but no later than within 15 minutes. The SEC will publish the proposal for public comment in the Federal Register. 
       
    • Outside Activities Proposal: Regulatory Notice 25-05 requested comment on a proposed new rule to streamline and reduce unnecessary burdens regarding existing requirements addressing the outside activities of member firms’ associated persons. Comments were due by May 13, but FINRA still welcomes feedback.  
       
    • Rule Modernization: Regulatory Notice 25-04 requested comment in connection with a broad review of FINRA’s regulatory requirements applicable to member firms and associated persons. Comments were due June 11, but FINRA still welcomes feedback. 
Disciplinary Actions
  • FINRA publishes disciplinary actions to remind members of specific conduct that violates FINRA rules and may result in disciplinary action. The June 2025 Monthly Disciplinary Actions are available here.
Education and Compliance Programs
Treasury Large Position (LPR) Rules Workshop 2025 | June 27 | 1–2 pm ET | Virtual Event 

Small Firm Briefing: FINRA Forward | June 30 | 4:30–5 pm ET | Virtual Event

Registration Systems Foundation | Sept. 16 | 8:30 am–5 pm | Rockville, MD | In-Person Event 
 
Disclosure Reporting Boot Camp | Sept. 17-18 | 8:30 am–5 pm | Rockville, MD | In-Person Event
 
Small Firm Conference | Oct. 9-10 | Dallas, TX | Hybrid Event
 
Joint Compliance Outreach Program for Municipal Advisors, Dealers, and Other Market Professionals | Hosted by FINRA, the SEC and the MSRB | Nov. 18-19 | Virtual Event | Link to Come 
 
Resources
Member Firm Hub – The latest guidance, resources, educational opportunities and more.
 
Comment Process – Watch this on-demand webinar on how to provide comments on rule modernization proposals, as well as to learn about the impact of comment letters and how they are used. 

Involvement and Election Process – Learn about ways to engage with FINRA to carry out our mission of protecting investors and safeguarding market integrity. Members can contribute their unique perspectives and skillsets with rotating terms on FINRA committees and other opportunities detailed in the Involvement and Election Process Overview. Submit an indication of interest to be considered to join a FINRA advisory committee or speak at a FINRA event by clicking here.
 
Membership Application Program (MAP) Tools – Find guidance and other resources to help current members prepare for their continuing membership application (CMA) and new applicants prepare for a new member application (NMA). 

FINRA Unscripted – Listen to our monthly podcast on a range of topics important to the securities industry.  
 
 
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About FINRA
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. FINRA regulates one critical part of the securities industry—member brokerage firms doing business with the public in the U.S. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.
Regulatory Contacts
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Firms wishing to change the name or email address of their executive representative or designated assistant should use the FINRA Contact System: http://www.finra.org/FCS.
 
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