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ARTICLE · 20 SEPTEMBER 2013

FINRA Files With SEC To Amend Rule On "Spinning" New Issues

Bingham McCutchen
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Rule 5131 is intended to curb abuses by FINRA members ("Members") and their associated persons in the allocation and distribution of "new issues."

United StatesFinance and Banking
Amy Natterson Kroll
Amy Natterson Kroll
Laura Flores
Laura Flores

FINRA has filed with the Securities and Exchange Commission ("SEC") a proposed rule change to amend FINRA Rule 5131 (the "Rule")1 to except from compliance with the Rule's "spinning provision"2 certain private funds of funds that satisfy a group of proposed preconditions.

Rule 5131 is intended to curb abuses by FINRA members ("Members") and their associated persons in the allocation and distribution of "new issues."3 The spinning provision is specifically designed to prevent the allocation and distribution of new issues to accounts in which executive officers and directors of investment banking clients, and persons materially supported by such executive officers and directors, have a beneficial interest in exchange for investment banking business.4 

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