New FINRA Rule 5123 Regarding Private Placements of Securities Effective December 3, 2012


In an effort to enhance oversight and investor protection over private placement activity of firms on behalf of other issuers, new Financial Industry Regulatory Authority, Inc. (FINRA) Rule 5123 became effective on December 3, 2012. Under new FINRA Rule 5123, each FINRA member firm that sells an issuer’s securities in a private placement will be required, subject to certain exemptions (which include private offerings to most types of institutional investors, as outlined below), to either:

..file with FINRA a copy of any offering documents used to sell such private placement, such as private placement memoranda, term sheets or other offering documents; or

..indicate that no offering documents were used.

Please see full alert below for more information.

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