Small-Capitalization Offerings

October 2025

FINRA is conducting a review of firm practices regarding public and private offerings of small-capitalized exchange-listed issuers¹ with business operations in foreign jurisdictions, such as China (collectively “small-cap offerings”). Specifically, FINRA is reviewing certain member firms that have been involved in multiple small-cap offerings as either an underwriter, bookrunner, syndicate member, selling group member or placement agent, as well as certain member firms that have participated in initial and/or secondary market trading related to small-cap offerings, including firms with omnibus accounts trading in these securities.

Unless otherwise noted, the relevant period for each request is January 1, 2023, through September 30, 2025 (the “Relevant Period”). In addition, if your response varies over the Relevant Period, please explain the differences in your response.

If your firm has participated in small-cap offerings as either an underwriter, bookrunner, syndicate member, selling group member or placement agent:

1. Provide the firm’s written supervisory procedures relevant to small-cap offerings in effect for any portion of the Relevant Period, including but not limited to written supervisory procedures related to due diligence, and the review and approval of the firm’s participation in relevant offerings.
2. Provide any compliance policies, manuals, training materials, compliance bulletins, and any other written guidance in effect for any portion of the Relevant Period relevant to small-cap offerings, including but not limited to due diligence and the review and approval of the firm’s participation in relevant offerings.
3. To the extent not provided in response to Requests 1 and 2, above, provide:
   1. the firm’s written supervisory procedures relevant to Regulation M in effect for any portion of the Relevant Period;
   2. any compliance policies, manuals, training materials, compliance bulletins, and any other written guidance in effect for any portion of the Relevant Period relevant to Regulation M;
   3. the firm’s written supervisory procedures relevant to FINRA Rule 5210 in effect for any portion of the Relevant Period; and
   4. any compliance policies, manuals, training materials, compliance bulletins, and any other written guidance in effect for any portion of the Relevant Period relevant to FINRA Rule 5210.
4. Provide a numbered tabular list identifying each small-cap offering in which the firm participated (whether as underwriter, bookrunner, syndicate member, selling group member or placement agent). Within the tabular list please include, as applicable:
   1. The name of the issuer;
   2. The type of offering (e.g., initial public offering, follow-on offering, private offering);
   3. The firm’s role in the offering (e.g., lead underwriter, syndicate member, placement agent);
   4. The exchange on which the securities traded upon issuance;
   5. The date the firm engaged with the issuer;
   6. The date the firm commenced its due diligence review;
   7. The date the firm concluded its due diligence review;
   8. Number of investors and types (e.g., domestic retail, foreign institutional) of investors that participated in the offering;
   9. Share price;
   10. Total number of shares issued;
   11. Total amount raised;
   12. Total number of shares sold by the firm;
   13. Total compensation received by the firm (broken down by category such as underwriting spread, expense reimbursement, and other compensation);
   14. Total other compensation received by the firm from the issuer within 24 months before or after the offering;
   15. Names of all parties involved in the offering, including auditors, law firms, investor relations firm, consultants and finders;
   16. Names of any other FINRA member firm(s) involved in the offering, include the role of the FINRA member firm(s); and
   17. Names of all individuals, including firm personnel, involved in the offering, including due diligence and review and approval of the offering.
5. Provide copies of engagement agreements, advisory agreements or other contracts to which the firm was a party relevant to each offering listed in response to Question 4, above.

If your firm has participated in initial allocation and/or secondary market trading related to small-cap offerings, including through omnibus accounts:

1. Provide copies of all versions of the firm’s written anti-money laundering compliance program, including all attachments, schedules, exhibits, appendices, addenda, and all other supplementary materials, that were in force during the Relevant Period.
2. Provide the firm’s written supervisory procedures relevant to securities trading (e.g., market manipulation, insider trading, spoofing and layering, marking the open or close, wash trading, pre-arranged or coordinate trading)—and any compliance policies, manuals, training materials, compliance bulletins, and any other written guidance relevant to the same—in effect for any portion of the Relevant Period.
3. To the extent not provided in response to Requests 1 and 2, above, provide:
   1. the firm’s written supervisory procedures relevant to supervision of omnibus accounts in effect for any portion of the Relevant Period; and
   2. any compliance policies, manuals, training materials, compliance bulletins, and any other written guidance in effect for any portion of the Relevant Period relevant to supervision of omnibus accounts.
4. Provide a list of all tools (e.g., exception reports, alerts, monitoring systems) that the firm used during the Relevant Period relevant to supervision of trading, and to detect and cause the reporting of suspicious activity (or attempted activity) in connection with: (a) the account opening process; (b) the deposit or delivery-in of shares; (c) trading; (d) money movements; (e) unauthorized access to customer accounts (e.g., account intrusions); and (f) ongoing customer due diligence. The list should include, at a minimum:
   1. The name of the tool;
   2. The time period the tool was in use;
   3. Frequency (e.g., ongoing, daily, weekly);
   4. A description of what the tool is designed to detect; and
   5. State whether the tool is proprietary or third-party.