Regulatory Notice 09-27

SEC Approves New FINRA Rule 5122 Relating to Private Placements of Securities Issued by a Member Firm or a Control Entity

Effective Date: June 17, 2009

Effective June 17, 2009, new FINRA Rule 5122 will require FINRA member firms and associated persons that engage in a private placement of such firm's securities or those of a control entity (member private offering or MPO) to comply with certain disclosure and filing requirements and limitations of the use of proceeds.

The new rule provides additional regulation of certain private placements, which are generally excluded from the scope of existing rules, including FINRA Rule 5110 (Corporate Financing Rule - Underwriting Terms and Arrangements) and NASD Rule 2720 (Distribution of Securities of Members and Affiliates - Conflicts of Interest), because these existing rules generally apply only to public offerings. The text of FINRA Rule 5122 is set forth in Attachment A of this Notice.

The rule will not apply retroactively to any offerings that have already commenced selling efforts as of the effective date, June 17, 2009.

Questions concerning this Notice should be directed to:

  • Paul Mathews, Director, Corporate Financing Department, at (240) 386-4623;
  • Lisa Toms, Associate Director and Senior Counsel, Corporate Financing Department, at (240) 386-4661;
  • Gary Goldsholle, Vice President and Associate General Counsel, Office of General Counsel (OGC), at (202) 728-8104; and
  • Stan Macel, Assistant General Counsel, OGC, at (202) 728-8056.