With the recently adopted FINRA Rule 5123, broker-dealers selling private placements will have to file a copy of any private placement memorandum, term sheet, or other offering document with FINRA. Further, if there are any material amendments, those amended versions of the documents will also have to be filed. These filings must be made electronically within 15 calendar days from the date of sale for sales on or after December 3, 2012, or FINRA must be informed that no such offering documents existed. See FINRA Rule 5123.
Exemptions for sales made to certain accounts/investors and for specific offerings do exist for these filing requirements. For example, sales to institutional accounts, investment companies, RIAs, banks, insurance companies, among others, are exempt from these filings. Further, if the offering involves, among other things, exempted securities offerings, Securities Act of 1933 Rule 144A or Regulation S offerings, and exempt securities with short term maturities are not required to have filings. It has been suggested that, since there are so many exemptions, FINRA Rule 5123 will only apply to the sale of private placements to non-accredited investors. See FINRA Regulatory Notice 12-40. In any event, such filings are supposed to provide FINRA with current information on these offerings to better monitor the market.
We shall see if this new Rule will be successful.