The Financial Industry Regulatory Authority (FINRA) recently announced that it is seeking comment on its rules governing the participation of its member firms in capital raising.
The request, part of the FINRA360 initiative, is one of three regulatory notices FINRA issued last week related to the capital formation process. The others notices relate to rules for underwriting arrangements and safe harbors from equity and debt research rules for desk commentary.
All three proposals seek to clarify the requirements for FINRA member firms engaged in the capital formation process.
“A vibrant capital-raising process supports the growth of the large and small businesses that create jobs and strengthen the economy. Broker-dealers perform a critical role in that process,” FINRA President and CEO Robert Cook said. “As the environment for capital raising evolves, it is essential that we continue to assess how regulation can best facilitate capital formation on a strong foundation of investor protection and market integrity.”
Regulatory Notice 17-14 requests comment on all FINRA’s existing rules, operations and administrative processes that address the capital-raising activities of its member firms, including recent additions regarding capital acquisition brokers and funding portals.
Regulatory Notice 17-15, requests comment on proposed amendments to modernize, simplify and clarify FINRA Rule 5110. The rule applies to underwriting terms and arrangements regarding the public offering of securities.
Regulatory Notice 17-16 is seeking comments on a proposal to create a limited safe harbor for eligible desk commentary that may rise to the level of a research report. The proposed safe harbor would be subject to several compliance conditions to mitigate research-related conflicts.
Comments on the Notices are requested by May 30, 2017.