[ by Howard Haykin ]

FINRA's Board of Governors met this week and gave the staff authorization to proceed with establishing new rules or rule amendments in the following areas: 

• Corporate Finance
• Margin for Equity Swaps
• Membership Requirements
• Private Placements

 
Corporate Financing.    A proposal to amend FINRA Rule 5110 (Corporate Financing Rule - Underwriting Terms and Arrangements) and FINRA Rule 5121 (Public Offerings of Securities With Conflicts of Interest) so as to refine the scope of the rules.  Specific rule changes would include: 

(i)  narrow definition of "participation or participating in a public offering" for purposes of triggering certain obligations under the rule;

(ii) modify lock-up restrictions to exclude certain securities acquired in an exercise, conversion or stock split during 180 days prior to the filing of a registration statement;

(iii) clarify that disclosure of member affiliations or associations applies only to relationships involving a participating member; and,

(iv) revise scope of the definition of "affiliate" to exclude subordinated debt ownership.

Margin Requirements for Security-Based Equity Swaps.    Comments will be solicited on proposed new FINRA Rule 4241 regarding margin requirements for equity swaps that are security-based swaps ("SBES").  A Regulatory Notice will detail terms and conditions of the new rule, accompanied by explanatory notes and commentary.  FINRA plans to publish the RegNote after the SEC takes action on its recently proposed capital, margin and segregation rules for security-based swap dealers  and major security-based swap participants.  Among other things, the RegNote will seek comment on proposed provisions in the rule to address margin requirements for cleared SBES and for non-cleared SBES. 
 
Membership Rules.    Comments will be solicited on the proposed consolidation of FINRA membership rules.  Certain changes to the rules were made in response to comments received on a prior rule proposal sent out in Regulatory Notice 10-01.  Members also will be asked to comment on additional rule provisions that address regulatory issues identified by the staff, and that codify existing membership-related interpretations and practices.  FINRA anticipates that the rule changes will promote understanding of the membership process.
 
Private Placement Filings.   A proposal will be filed to enhance information that member firms submit as part of private placement filings.  Among other things, the proposed changes would require firms to provide, additional information regarding:  (i) type of offering;  (ii) the issuer;  and,  (iii) issuer management.
 

For further details, go to:   [ FINRA Communications with Firms, 2/14/13 ].