The regulatory authority is also proposing updates to rules regarding underwriting arrangements and desk commentary.
The Financial Industry Regulatory Authority (FINRA), as part of a review of its own operations and programs — the FINRA360 initiative — is calling for comment on three of its proposed rules related to the capital formation process.
One of those proposed rules focuses on the capital-formation processes of its member firms, “with the others seeking comment on proposed amendments to rules for underwriting arrangements and a proposed safe harbor from equity and debt research rules for desk commentary,” FINRA says in a statement. “All three proposals seek to clarify the requirements for FINRA member firms engaged in the capital formation process.”
The specific rule-making notices are:
Regulatory notice 17-14, which requests comment on all of 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.” (To see the entire notice, go to http://bit.ly/2opJbPj ).
FINRA notes that questions regarding notice 17-14 should be directed to: Joseph Price, senior vice president and counsel, corporate financing/advertising regulation, at (240) 386-4642; or James S. Wrona, vice president and associate general counsel, at (202) 728-8270; or Jeanette Wingler, associate general counsel, at (202) 728-8013.
Regulatory notice 17-15, which 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.” (To see the entire notice, go to http://bit.ly/2o08hJc )
Questions regarding notice 17-15 should be directed to: Joseph Price, senior vice president and counsel, at the aforementioned number; or Kathryn M. Moore, associate general counsel, at (202) 728-8200; or Jeanette Wingler, associate general counsel, also at the aforementioned number.
Regulatory notice 17-16 “clarifies the application of FINRA’s research rules to desk commentary by sales and trading and principal trading personnel and solicits comments on a proposal to create a limited safe harbor for eligible desk commentary that may rise to the level of a research report,” according to FINRA. The proposed safe harbor “would be subject to a number of compliance conditions to mitigate research-related conflicts,” officials add. (To see the entire notice, go to http://bit.ly/2pPuRR7 .)
Questions regarding notice 17-16 should be directed to: Philip Shaikun, vice president and associate general counsel, at (202) 728-8451; or Jeanette Wingler, at her aforementioned number.
Specific questions FINRA poses to its potential commenters include the following:
“Have FINRA’s rules covering the capital-raising process effectively responded to the problem(s) they were intended to address [regarding notice 17-14]?”
“What are the alternative approaches, other than the proposal, that FINRA should consider [regarding notice 17-15]?”
And, “What economic impacts, including costs and benefits, would be associated with the proposal? To what extent would these economic impacts differ by business attributes, such as size of the firm or differences in business models [regarding notice 17-16]?”
FINRA officials are requesting that comments on their proposals be sent by May 30, 2017.
“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,” Robert W. Cook, FINRA’s president and CEO, says in a prepared statement.
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