New FINRA Rule 6490, Processing of Company-Related Actions, codifies the requirements in SEA Rule 10b-17, an anti-fraud rule, for issuers of non-exchange-listed publicly trading securities to provide timely notice to FINRA of certain corporate actions - e.g., dividend or other distribution of cash or securities, stock split or reverse split, rights or subscription offering.  It becomes effective 9/27/10. 

The rule clarifies the scope of FINRA’s regulatory authority and discretionary power when processing documents related to announcements for company-related actions for non-exchange listed equity and debt securities, and implements fees for these services.  Generally, issuers must notify FINRA at least 10 days prior to the record date for such corporate action.  Issuers also must complete necessary forms and pay applicable fees within the required time periods.  

The new rule further permits FINRA to request other documents that may be necessary to verify info that issuers provide on the forms.  On a case-by-case basis, FINRA may conduct detailed reviews of such submissions and delay a request to announce a corporate action for reasons of deficiency and to protect investors. 

    FINRA Operations Determination.   FINRA Operations will review submissions and, if FINRA Operations believes that one of five explicitly enumerated factors outlined in Rule 6490 may be triggered, it generally will conduct an in-depth review of the Company-Related Action and may seek additional information or documentation from the issuer or a duly authorized representative.  Factors that may be considered by the FINRA Operations in finding a request to process documentation related to a Company-Related Action deficient are explicitly limited to the following:

• FINRA staff reasonably believes the forms and all supporting documentation, in whole or in part, may not be complete, accurate or with proper authority;
• Issuer is not current in its reporting obligations, if applicable, to the SEC or other regulatory authority;
• FINRA has actual knowledge that parties related to the Company-Related Action are the subject of pending, adjudicated or settled regulatory action or investigation by a regulatory body, or civil or criminal action related to fraud or securities laws violations;
• FINRA has actual knowledge or been provided with information from a government authority or regulator, indicating that persons related to the Company-Related Action may be potentially involved in fraudulent activities related to the securities market and/or pose a threat to public investors; and/or
• Significant uncertainty in the settlement and clearance process for the security.