SEC Approves Amendments to FINRA’s Corporate Financing Rule

Broader Availability of Termination Fees and Rights of First Refusal -

Elimination of Filing for Certain ETFs:

In May 2014, the SEC approved FINRA’s proposed amendments to Rule 5110, commonly called the Corporate Financing Rule. The Corporate Financing Rule addresses commercial fairness in underwriting and other arrangements for the distribution of securities. Rule 5110 provides for review by FINRA of underwriting or other arrangements in connection with most public offerings in order to enable FINRA to assess the fairness and reasonableness of proposed underwriting compensation and arrangements. In addition, the underwriters of an offering must comply with a variety of substantive provisions in Rule 5110, even if the offering is exempt from filing.

Among other changes, the amendments expand an investment bank’s ability to include termination fees and rights of first refusal in engagement letters, and eliminate the requirement to file offerings of certain additional types of ETFs.

Please see full alert below for more information.

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Topics:  Compliance, Corporate Financing, Corporate Financing Rule, ETFs, FINRA, SEC

Published In: General Business Updates, Finance & Banking Updates, Labor & Employment 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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