The Financial Industry Regulatory Authority (FINRA) has issued Regulatory Notice 08-74 to provide additional information and guidance on new FINRA Rules governing notification requirements and marketplace-specific rules relating to Regulation M. The new rules take effect on December 15. On September 11, the Securities and Exchange Commission approved a proposed rule change that:

  • Adopts new FINRA Rule 5190, which includes the Regulation M-related notification requirements applicable to firms participating in securities offerings. Rule 5190 consolidates some of the Regulation M-related notification requirements that currently are found in NASD and NYSE rules. Unlike FINRA’s current rules, the new rule applies uniformly to distributions of listed and unlisted securities.
  • Adopts new FINRA Rule 6470, which includes certain Regulation M-related requirements that are currently in the OTC Bulletin Board rules and applies to all OTC Equity Securities. Rule 6470 requires that, in connection with a distribution of an OTC Equity Security, a firm must withdraw its quotations in the offered security to comply with the applicable restricted period under Regulation M.

The proposed rule changes also make conforming amendments to the Regulation M-related rules applicable to the Alternative Display Facility. Consistent with the amendments, and as part of the rule change approved by the SEC, FINRA has clarified the scope and application of certain marketplace-specific requirements.