FINRA Releases FAQs on its Public Offering Review Process

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FINRA recently released a set of frequently asked questions (“FAQs”) relating to its public offering process and the Corporate Financing Rule (Rule 5110). The guidance provided in the FAQs is summarized below.

Underwriting Compensation:

Lock-up Requirements and Exemptions -

Under FINRA Rule 5110(g), unregistered securities that are excluded from the calculation of underwriting compensation3 are generally subject to a 180-day lock-up. However, FINRA has provided exemptions from the lock-up requirement for securities acquired as a result of an exercise, conversion, stock split or a pro rata rights offering of securities acquired before the review period. The FAQs set forth the facts and circumstances that FINRA staff consider when determining whether to grant an exemption...

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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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