FINRA Regulation of Private Offerings

Download: FINRA-Regulation-of-Private-Offerings-Oct-2014.pdf

FINRA (and its predecessor, the National Association Securities Dealers, the “NASD,” for convenience jointly referred to here as FINRA) for many years avoided meaningful regulation of the substance of private offerings. Examiners would periodically look at private placement memoranda (“PPM’s”) but lacked the training or understanding both of the legal requirements and what is expected for substance in private offerings and appropriate due diligence. Further, the concept of highly sophisticated offerings with active due diligence and bargaining by the buyer was far beyond their ken. Accordingly, FINRA has been ill-equipped to comprehend both the general market for these securities and the numerous variations and shapes that private offerings take.

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FINRA Regulation of Private Offerings

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