Proposed Rule Change to Amend FINRA Rules 5110 (Corporate Financing Rule - Underwriting Terms and Arrangements) and 5123 (Private Placements of Securities)

Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend FINRA Rules 5110 (Corporate Financing Rule—Underwriting Terms and Arrangements) and 5123 (Private Placements of Securities).  The proposed amendments to Rule 5110 would improve and clarify the valuation method for securities considered underwriting compensation, add new exclusions from underwriting compensation that codify exemptions FINRA staff has issued, and include minor changes to improve the operation of the rule.  The proposed amendments to Rule 5123 would expand available exemptions to include offerings sold to investors meeting the categories of accredited investor for certain family offices and certain entities with assets under management in excess of $5,000,000, consistent with the Commission’s treatment of those categories.