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ARTICLE · 06 JANUARY 2020

Changes To FINRA Rules 5130 And 5131 Go Effective – Considerations For Private Fund Managers

Proskauer Rose LLP
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On November 5, 2019, the SEC approved changes to FINRA Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) and Rule 5131 (New Issue...

United StatesFinance and Banking
Michael Mavrides
Michael Mavrides
Benjamin Catalano
Benjamin Catalano
Edward Kwalwasser
Edward Kwalwasser
Anthony Drenzek
Anthony Drenzek
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On November 5, 2019, the SEC approved changes to FINRA Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) and Rule 5131 (New Issue Allocations and Distributions). FINRA announced that the changes would become effective on January 1, 2020, in Regulatory Notice 19-37.

FINRA Rules 5130 and 5131 protect the integrity of public offerings for "new issue" securities (i.e. initial public offerings of equity securities) by, among other things, ensuring that member firms make bona fide public offerings at the offering price, do not withhold securities for their benefit or the benefit of industry insiders, including employees and industry professionals, or award them to persons who can give them future business (a practice known as "spinning").

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