As previously covered, FINRA stated that the proposal would simplify certain provisions while maintaining protections for market participants. In addition, the proposal would update cross-references and make technical changes to other FINRA rules as a result of the amendments.
As modified in response to public feedback, FINRA's proposed amendments would, among other things:
- clarify and reduce filing requirements;
- codify filing requirement exemptions for shelf offerings;
- expand and clarify the scope of Rule 5110 exemptions;
- amend the definition of "underwriting compensation";
- modify, clarify and expand the venture capital exceptions;
- clarify the treatment of nonconvertible or non-exchangeable debt securities and derivatives;
- clarify "lock-up" restrictions and adding an exception from such restrictions for certain securities acquired from an issuer;
- modify and clarify the list of prohibited unreasonable terms and arrangements related to a public offering;
- consolidate and modernize certain defined terms under Rule 5110; and
- modify the proposed Supplementary Material .01(a)(7) concerning underwriting compensation.
Comments on the proposal must be submitted by January 21, 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.