The Financial Industry Regulatory Authority issued a regulatory notice announcing the Securities and Exchange Commission’s approval of a new National Association of Securities Dealers Rule 2720 which will become effective on September 14. The new rule generally prohibits a member with a “conflict of interest,” as defined in the new rule, from participating in any public offering unless the nature of such conflict is prominently disclosed and one of the following applies: (i) a qualified independent underwriter or “QIU” participates in the offering; (ii) the member firm primarily responsible for managing the offering does not itself have a conflict and is not an affiliate of the conflicted member firm; or (iii) the offered securities are listed on an exchange which is a “bona fide public market” or are rated “investment grade” by a national statistical rating organization. The new rule also includes certain provisions regarding net capital, discretionary accounts and filing requirements.

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