FINRA Regulatory Notice 13-43: SEC Approves FINRA Rule Regarding Issue Allocations and Distributions, MFA Submits Comment Letter Regarding Amendments

SEC approved FINRA amendments to Supplementary Material .02 to FINRA Rule 5131 ("New Issue Allocations and Distributions"), which is intended to prevent "spinning." The rule amendment permits firms to rely upon written representation from certain unaffiliated private funds when allocating shares of a new issue.

The Managed Funds Association ("MFA") had previously submitted comments to the SEC in support of FINRA's proposed amendments. According to the recent MFA comment letter on FINRA's amendments to Rule 5131, there is a reduced risk of spinning through an investment in a hedge fund due to their structure, diversified range of investors, and investment activity of allocating capital across a broad portfolio of assets.

See: FINRA Regulatory Notice 13-43; Press Release.See also: MFA Comment Letter. Related news: MFA Submits Comments to SEC Regarding Proposed Amendments to FINRA Rule 5131 (October 1, 2013); FINRA Files Proposed Rule Change to Amend FINRA Rule 5131 (August 23, 2013).