FINRA Asserts Jurisdiction over Private Placements
FINRA has proposed to expand its review of private placements to include any private placement in which a broker-dealer participates rather than those where it is the issuer. Proposed rule 5112 would apply to any private placement in which the BD participates in the distribution on any basis or provides consulting or advisory services to the issuer. The rule would require filing of the offering document with FINRA, which FINRA could review following the commencement of the offering. The rule also limits use of selling compensation of any type to less than 15% of the offering proceeds, the use of which must be disclosed. Offerings to institutional accounts, qualified purchasers, QIBs, and investment companies are exempt.
OUR TAKE: This represents a major expansion of FINRA regulatory jurisdiction over private placements. This proposal applies to any private placement to accredited investors that is sold by a broker-dealer. This would subject hedge funds and private equity funds to PPM review.
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p122787.pdf
OUR TAKE: This represents a major expansion of FINRA regulatory jurisdiction over private placements. This proposal applies to any private placement to accredited investors that is sold by a broker-dealer. This would subject hedge funds and private equity funds to PPM review.
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p122787.pdf
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