Notifications pertaining to Regulation M offerings are governed by FINRA Rules 5190 and 6275(f), and applicable FINRA trade reporting rules relate to distributions.  On Wednesday, FINRA announced a new process for the electronic submission of the notice and information required under the rules. Beginning on 6/4/12, firms must file submit the notices and information required by these rules using the new electronic submission process.  Prior to that date, firms will have a chance to test out the system, though it will not be available for official use. Background and Discussion.   Firms must provide FINRA notice and information relating to activities in connection with a distribution subject to SEC Regulation - which they do using paper forms.  For example:

• under Rule 5190(c), a firm participating in a distribution subject to a restricted period under Rule 101 of Reg. M must provide notice to FINRA no later than the business day prior to the 1st complete trading session of the applicable restricted period, unless later notification is necessary under specific circumstances.

• under Rule 6275(f), an ADF Market Maker is required to request excused withdrawal status (and rescission of such status) to comply with an applicable restricted period under Reg. M.

• currently, firms submit notice and information on one or more of these forms: (i) Regulation M Restricted Period Notification Form, (ii) Regulation M Trading Notification Form;  or (iii) Regulation M Notice of Intent to Impose a Penalty Bid and/or Effect a Syndicate Covering Transaction Form, as applicable, via email, facsimile or a third-party vendor.

And, when providing notice and information to FINRA - under trade reporting rules applicable to OTC equity transactions - that a firm is relying on the exception from the trade reporting requirements for transactions that are part of an “unregistered secondary distribution,” firms currently do so using Regulation M Trading Notification Form. Electronic Submissions. Starting on Monday, 6/4/12, FINRA's new process for electronic submissions through the FINRA Firm Gateway will be the only way to submit the required information.  And on that date, firms can no longer use the current forms and processes. A feature of the website is that, in addition to submitting the required notice and information electronically, firms will be able to view, edit and delete their submissions, as well as view their prior submissions. Access to the new electronic process will require a FINRA user ID and password administered under the FINRA Entitlement Program.  Users should contact their firm’s Super Account Administrator (SAA) to assist with establishing a new FINRA user ID and password, or they can use an existing user ID and password to access the system.  SAAs may contact the FINRA Help Desk at (800) 321-6273 with questions. Process Has Changed, The Rules Have Not. FINRA advices that the rules have not changed - just the process - although FINRA does note that some firms also may have obligations under the Reg. M-related notification rules of a national securities exchange. NYSE and NYSE Amex will publish an Information Memo and NYSE Arca will publish a Regulatory Bulletin relating to the use of FINRA’s new electronic process.  Nasdaq will issue its own publications and announcements, as well. Preparing for the Changeover. Prior to June 4th, the system will be available for testing purposes, only.  In addition, FINRA suggests that:

• Firms consult RegNote 08-74 (December 2008) for a more detailed discussion of the notice and information requirements under Rule 5190, as well as the timing of such notice, the parties that must provide such notice, and the forms and submission processes that currently are in use.

• Firms be aware of Rules 6282.01, 6380A.01, 6380B.01 and 6622.02, which govern the reporting of OTC equity transactions - in NMS and non-NMS stocks.

• Firms consult RegNote 11-40 (August 2011) for a more detailed discussion of the notice and information requirements under Rules 6282.01, 6380A.01, 6380B.01 and 6622.02, as well as the timing of such notice, the parties that must provide such notice, and the forms and submission processes that currently are in use.

• FINRA notes that while not required under FINRA rules, firms also may submit a request for an Underwriting Activity Report electronically through this system.

• See, e.g., NASDAQ Rule 4619(e).

FINRA Staff Contacts. Direct questions to:   Scott Trilling, Deputy Director, Market Reg - (240) 386-5113;  Melissa Springer, Team Leader, Market Reg - (240) 386-5088;  John Scrofani, Director, NY Equities Section of Market Reg. - (917) 281-3117;  FINRA’s Reg. M Filings General Inquiry Line - (240) 386-5560; or,  Office of General Counsel - (202) 728-8071. For further details, go to:  [FINRA Regulatory Notice 12-19, April 2012].