Rule 5131 restricts (so called “spinning”)
brokers from selling new issues to accounts that are beneficially owned by persons that
are executive officers or directors of public companies having specified relationships with the broker-dealer (and persons materially supported by such persons) (“Covered Persons”).
What is a 5131 covered person?
Rule 5131 restricts (so called “spinning”)
brokers from selling new issues to accounts that are beneficially owned by persons that
are executive officers or directors of public companies having specified relationships with the broker-dealer (and persons materially supported by such persons) (“Covered Persons”).
What is a FINRA restricted person?
The term “Restricted Person” includes
broker-dealers and their personnel
, finders and fiduciaries in securities offerings, portfolio managers, persons owning a broker-dealer, and, in some cases, persons materially supported by, or the immediate family members of these persons.
What is a FINRA IPO?
FINRA Rule 5131 (
New Issue Allocations and Distributions
) addresses potential misconduct in the allocation and distribution of new issues.
1
. Since the adoption of the rule, FINRA has received several interpretive questions concerning its scope and application.
What is an unaffiliated private fund?
An unaffiliated private fund is a
“private fund
,” as defined in Section 202(a)(29) of the Investment Advisers Act, whose investment adviser does not have a control person in common with the investment adviser to the account.
What is considered new issue income?
New issues, whether stocks or bonds, are a means
of raising capital for a company
. New equity shares are often issued via an initial public offering (IPO), allowing investors to buy the stock of a previously private company for the first time.
Who does FINRA Rule 3210 apply to?
What Is Rule 3210? The purpose of Rule 3210 is to
govern accounts opened or established by advisors and brokers at firms other than the member firm where they are employed or registered
. Accounts that financial advisors and brokers have with their employers are easily monitored.
Who is considered immediate family by FINRA?
The term “immediate family” means parents, grandparents, mother-in-law or father- in-law, spouse or domestic partner, brother or sister, brother-in-law or sister-in-law, son-in law or daughter-in-law, children, grandchildren, cousin, aunt or uncle, or niece or nephew, and
any other person who resides in the same
…
Who is a restricted person?
Restricted Person means a person that is (i)
listed on, or owned or controlled by a person listed on any Sanctions List
; (ii) located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of a country or territory that is the target of …
What is the new issue rule?
Requires FINRA member firms to make a bona fide offering of new issues to the public
and may not withhold shares for its own account, the accounts of any of its employees, or for accounts of industry insiders.
Are FINRA filings public?
The
Public Offering System facilitates filings required under FINRA’s Corporate Financing Rules
.
Who is prohibited from buying an IPO directly from an underwriter?
FINRA prohibits the purchase of equity IPOs (Initial Public Offerings) by
industry “insiders
.” The list of prohibited purchasers includes FINRA member firms for their own accounts, officers and employees of member firms (and their immediate family members), fiduciaries to member firms (such as accountants and lawyers …
Can a restricted person buy an IPO?
More information on this can be found on the FINRA website, Rules 5130 and 5131. The short answer to “who can invest in an IPO?” is quite simple: aside
from restricted persons, any individual investor who considers the investment to be suitable is allowed to invest!
What is unaffiliated investment?
Unaffiliated investments are
investment holdings of an insurance company that it neither controls nor shares joint ownership with
. Unaffiliated investments can include stocks, bonds, property, and other assets and are often disclosed in the financial statements of insurers.
What is qualified independent underwriter?
An underwriter required to participate in an SEC-registered offering in
which: … There is a conflict of interest under FINRA Rule 5121 (for example, when the issuer plans to use 5% or more of the offering proceeds to repay a loan extended by an affiliate of an underwriter).
What is Regulation M?
What is Regulation M? Regulation M is
intended to protect the trading markets by prohibiting activities by distribution participants
that could manipulate the market for a security that is the subject of an offering.
