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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