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News Release

Angelita Williams (202) 728-8988
Nancy Condon (202) 728-8379

FINRA Requests Comment on Rules Impacting Capital Formation

Additional Proposals Include Updates to Rules on Underwriting Arrangements and Desk Commentary

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today requested comment on its rules governing the participation of its member firms in capital raising, as part of a continuing effort to modernize its regulation of those activities while maintaining important protections for investors. The request, part of the FINRA360 initiative, is one of three regulatory notices FINRA issued today related to the capital formation process, with the others seeking comment on proposed amendments to rules for underwriting arrangements and a proposed safe harbor from equity and debt research rules for desk commentary. All three proposals seek to clarify the requirements for FINRA member firms engaged in the capital formation process.

“A vibrant capital-raising process supports the growth of the large and small businesses that create jobs and strengthen the economy. Broker-dealers perform a critical role in that process,” said FINRA President and CEO Robert W. Cook. “As the environment for capital raising evolves, it is essential that we continue to assess how regulation can best facilitate capital formation on a strong foundation of investor protection and market integrity.”

Regulatory Notice 17-14 requests comment on all of FINRA’s existing rules, operations and administrative processes that address the capital-raising activities of its member firms, including recent additions regarding capital acquisition brokers and funding portals. The Notice is part of the new FINRA360 initiative, in which FINRA is conducting a comprehensive review of its operations and programs.

An additional Notice issued today, Regulatory Notice 17-15, requests comment on proposed amendments to modernize, simplify and clarify FINRA Rule 5110. The rule applies to underwriting terms and arrangements regarding the public offering of securities.

FINRA also issued Regulatory Notice 17-16, which clarifies the application of FINRA’s research rules to desk commentary by sales and trading and principal trading personnel and solicits comments on a proposal to create a limited safe harbor for eligible desk commentary that may rise to the level of a research report. The proposed safe harbor would be subject to a number of compliance conditions to mitigate research-related conflicts.

Comments on the Notices are requested by May 30, 2017.

FINRA is dedicated to investor protection and market integrity. It regulates one critical part of the securities industry ─ brokerage firms doing business with the public in the United States. 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