New FINRA Rule 5123 Takes Effect Requiring Notice of Private Placements by Member Firms
The Financial Industry Regulatory Authority has adopted new Rule 5123 requiring members to file notice of their participation in private placements. The Rule took effect on December 3rd 2012. The new rule does not contain a definition of “private placements” and accordingly is presumed to cover all private placements including those involving general solicitation and advertising under the new Rule 506(c) created by the JOBS Act.
Rule 5123 requires member firms to file a copy of the private placement memorandum, term sheet or other disclosure document with FINRA, for all offering in which they sell securities, within 15 calendar days of the first sale.
FINRA enacted the rule in an effort to further police the private placement market and to ensure that members participating in these private offerings conduct sufficient due diligence on the securities and its issuer
In filings with the SEC, FINRA expressed its position that Rule 5123 is consistent with the JOBS Act in
