11880. Settlement of Syndicate Accounts
(a) Definitions
(1) “Corporate debt security” means a debt security that is United States (“U.S.”) dollar-denominated and issued by a U.S. or foreign private issuer, including a Securitized Product as defined in Rule 6710(m). “Corporate debt security” does not include a Money Market Instrument as defined in Rule 6710(o).
(2) "Selling syndicate" means any syndicate formed in connection with a public offering to distribute all or part of an issue of corporate securities by sales made directly to the public by or through participants in such syndicate.
(3) "Syndicate account" means an account formed by members of the selling syndicate for the purpose of purchasing and distributing the corporate securities of a public offering.
(4) "Syndicate manager" means the member of the selling syndicate that is responsible for maintenance of syndicate account records.
(5) "Syndicate settlement date" means the date upon which corporate securities of a public offering are delivered by the issuer to or for the account of the syndicate members.
(b) Final Settlement
(1) Final settlement of syndicate accounts shall be effected by the syndicate manager within 90 days following the syndicate settlement date, except as provided in paragraph (b)(2) of this Rule.
(2) Final settlement of syndicate accounts for a public offering of a corporate debt security shall be effected by the syndicate manager by remitting to each syndicate member at least 70 percent of the gross amount due to such syndicate member within 30 days following the syndicate settlement date, with any final balance due remitted within 90 days following the syndicate settlement date.
(c) No later than the date of final settlement of the syndicate account, the syndicate manager shall provide to each member of the selling syndicate an itemized statement of syndicate expenses that shall include, where applicable, the following categories of expenses: legal fees; advertising; travel and entertainment; closing expenses; loss on oversales; telephone; postage; communications; co-manager's expenses; computer, data processing charges; interest expense; and miscellaneous. The amount under "miscellaneous" should not be disproportionately large in relation to other items and should include only minor items that cannot be easily categorized elsewhere in the statement. Any other major items not included in the above categories shall be itemized separately.
(d) Settlement of Underwritten Public Offerings
The syndicate manager of a public offering underwritten on a "firm-commitment" basis shall, immediately, but in no event later than the scheduled closing date, notify the FINRA's Operation Department of any anticipated delay in the closing of such offering beyond the closing date in the offering document or any subsequent delays in the closing date previously reported pursuant to this Rule.
| Amended by SR-FINRA-2022-025 eff. Jan. 1, 2023. Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010. Amended by SR-NASD-88-22 eff. Aug. 3, 1988. Amended by SR-NASD-87-47 eff. June 12, 1988. Amended by SR-NASD-87-7 eff. May 1, 1987. Adopted by SR-NASD-85-14 eff. Oct. 1, 1985. Selected Notices: 85-59, 87-23, 87-88, 88-34, 88-73, 10-49, 22-24. |