FINRA Rule 5123 requires filings for certain private placements sold by broker‐dealers

Abstract

Purpose

The purpose of the article is to inform the various securities market participants about new Rule 5123 of the Financial Industry Regulatory Authority, Inc. (FINRA), its specifics and the requirements it may impose.

Design/methodology/approach

The author outlines the requirements of the Rule, exemptions to its application, additional background information and some clarifications based on the FINRA adopting notice.

Findings

Rule 5123, which became effective December 3, 2012, requires FINRA member broker‐dealer firms that sell an issuer's securities in a private placement, subject to a number of exemptions, either to file with FINRA a copy of any private placement memorandum, term sheet or other offering document the member firm used or to indicate that they did not use any such offering documents. Member firms must make this filing within 15 calendar days of the date of the first sale and file materially amended versions of any documents previously filed.

Practical implications

The author hopes the discussion in the article will enable affected market participants, which include US‐registered broker‐dealers as well as issuers of securities in private placements using the services of FINRA member broker‐dealers, to be informed about and to comply with the Rule.

Originality/value

The paper provides practical guidance from experienced securities lawyers.

Citation

Miller, M.R. (2013), "FINRA Rule 5123 requires filings for certain private placements sold by broker‐dealers", Journal of Investment Compliance, Vol. 14 No. 1, pp. 16-18. https://doi.org/10.1108/15285811311321215