FINRA Proposes Additional Exemptions From IPO "New Issue" Rules

FINRA proposed amendments to Rule 5130 ("Restrictions on the Purchase and Sale of Initial Equity Public Offerings") and Rule 5131 ("New Issue Allocations and Distributions"). The proposed amendments would exempt additional persons and offerings from the scope of the rules, and conform the exemptions in the two rules more closely. In particular, the proposal would:

• expand the categories of entities to whom a broker-dealer may sell IPO shares in accordance with FINRA Rule 5130 to include (i) additional categories of "family investment vehicles" based on the "family office" exemption under the Investment Advisers Act of 1940, (ii) sovereign entities that own a broker-dealer, (iii) foreign employee retirement benefit plans that meet certain conditions and (iv) foreign investment companies that are "widely held" based on additional criteria;