FINRA Rule 5110 (the "Corporate Financing Rule—Underwriting Terms and Arrangements") (formerly NASD Rule 2810) requires a member that participates in certain types of public offerings to file documents and information with FINRA about the underwriting terms and arrangements. FINRA reviews this information to determine whether the underwriting compensation and other terms and arrangements are fair and in accordance with its Rules. Speaking generally, the Corporate Financing Rule is intended to protect issuers (and, indirectly, investors in those issuers) from bearing the costs of excessive compensation paid by an issuer to a FINRA member in connection with an underwriting.
FINRA Rule 5121 (formerly NASD Rule 2720) requires a member that participates in a public offering as to which it has a conflict of interest to take steps to address the conflict. Most significantly, a firm may be required to hire a "qualified independent underwriter" to participate in, or oversee, the underwriting, and there must be prominent disclosure in the offering documents of the conflict. Further, a member is generally prohibited from placing in a discretionary account any underwritten securities as to which the firm has a conflict unless the firm has received and maintains specific written approval from the account holder.
See also the topic page on FINRA Private Placement Rules (primary dealing with Rule 5122 (Conflicts in Private Offerings) and Rule 5123 (Private Placements) and the topic page on Selling Syndicate Procedures (primarily dealing with FINRA Rule 5141 and Rule 5160).