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FINRA has released its annual letter highlighting its areas of focus. Quite a number of the priorities reflect market changes, and reflect FINRA’s focus on developments post-JOBS Act. For example, the letter notes that given the resurgence of the IPO market, FINRA will review the firm’s due diligence activities, monitor the completeness and accuracy of firms’ filings regarding public underwritings with FINRA’s Corporate Finance Department, and review compliance with rules concerning the sales and allocations of IPO securities, including whether firms are incenting associated persons to sell cold offerings to obtain client allocations of hot offerings. Consistent with prior years, FINRA notes that it remains concerned with abuses in the private placement market, including the use of advertisements and marketing materials, and the diligence undertaken by placement agents in private offerings. FINRA cites various concerns uncovered in its review of filings made pursuant to Rule 5123, such as contingency offerings with deficient escrow procedures; private placements in which the issuer is in distressed financial condition or in default on its outstanding liabilities; and raising proceeds in serial private placements to repay previous investors. Finally, FINRA mentions its ongoing crowdfunding efforts. Review the letter here: http://www.finra.org/web/groups/industry/@ip/@reg/@guide/documents/industry/p419710.pdf.
Topics: Advertising, Due Diligence, Filing Requirements, FINRA, IPO, Marketing, Private Placements
Published In: 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.
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