Regulatory Update

Saturday, December 15th, 2012 and is filed under AI Insight News

December 15, 2012 – FINRA Regulatory Notice 12-55:  Guidance on FINRA’s Suitability Rule. In November 2010, the Securities and Exchange Commission approved FINRA Rule 2111 (Suitability), which became effective on July 9, 2012. In May 2012, FINRA issued Regulatory Notice 12-25, which provides guidance on the rule in a frequently asked questions format. This Noticeaddresses two issues discussed in Regulatory Notice 12-25: the scope of the terms “customer” and “investment strategy.” In addition, FINRA has created a suitability web page that, among other things, will locate in one place questions and answers regarding FINRA Rule 2111. The suitability website can be found here and Notice 12-55 can be read in its entirety here.

Regulatory Notice 12-40:  SEC Approves New FINRA Rule 5123 Regarding Private Placements of Securities. The SEC approved new FINRA Rule 5123 to require each FINRA member firm that sells an issuer’s securities in a private placement, subject to certain exemptions, to file with FINRA a copy of any private placement memorandum, term sheet or other offering document the firm used within 15 calendar days of the date of the sale, or indicate that it did not use any such offering documents. Firms must file the required offering documents electronically with FINRA through the FINRA Firm Gateway. The rule became effective December 3, 2012, and applies prospectively to private placements that begin selling efforts on or after that date.  Subsequent to this Notice FINRA has posted a list of frequently asked questions regarding the new rule which can be found here and Notice 12-40, can be read in its entirety here.