Cover Your Backside: FINRA Proposes To Allow Tail Fees and ROFRs


FINRA recently issued Regulatory Notice 12-27 regarding proposed amendments (the “Proposed Amendments”) to FINRA Rule 5110 (the “Corporate Financing Rule”). Provided that certain criteria are satisfied, the Proposed Amendments would afford issuers and investment banks with greater flexibility to use termination fees (“Tail Fees”) and/or rights of first refusal (“ROFRs”) in structuring and negotiating engagement letters and underwriting and financial advisory services.

What Is The Corporate Financing Rule?

The Corporate Financing Rule requires that member firms file with FINRA’s Corporate Financing Department documents and information, including engagement letters, regarding the underwriting arrangements in public securities offerings in which member firms participate. Through the Corporate Financing Rule, FINRA regulates the commercial reasonableness and fairness of underwriting compensation and arrangements in such offerings.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Published In: Administrative Agency Updates, Business Organization Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Butler Snow LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »