FINRA Issues Proposed Rule Set for Limited Corporate Financing Brokers

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FINRA issued for comment a Proposed Rule Set for Limited Corporate Financing Brokers (LCFBs). The proposed rule set would provide a lighter regulatory regime for LCFBs, defined as any broker that solely engages in one or more of the following activities:

    • advising an issuer, including a private fund, concerning its securities offerings or other capital raising activities;
    • advising a company regarding its purchase or sale of a business or assets or regarding its corporate restructuring, including a going-private transaction, divestiture or merger;
    • advising a company regarding its selection of an investment banker;
    • assisting in the preparation of offering materials on behalf of an issuer;
    • providing fairness opinions; and
    • qualifying, identifying or soliciting potential institutional investors.

The rule set would not apply to firms that carry or maintain customer accounts, handle customers’ funds or securities, accept customers’ trading orders or engage in proprietary trading or market-making. The proposed rule set also is limited in that, among other things, it would not eliminate all exam requirements for principals and representatives that are associated with an LCFB and would not eliminate the net capital requirements. The comment period expires on April 28. Regulatory Notice.

 

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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.

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