SEC Approves FINRA Amendments to Corporate Financing Rules (FINRA Regulatory Notice 14-22)

FINRA issued a regulatory notice to announce the SEC approval of amendments to FINRA Rule 5110 ("Corporate Financing Rule-Underwriting Terms and Arrangements") to expand circumstances where termination fees and rights of refusal are permissible. The amendments provide a greater degree of flexibility in negotiating the terms of their agreements for terminated offerings while providing protection for issuers if a firm fails to perform the underwriting services.

Additionally, the amendments add an exemption for exchange-traded funds that are not investment companies from the Rule 5110 filing requirements. Specifically, the rule provides an exemption from filing offerings of securities issued by a pooled investment vehicle, whether formed as a trust, partnership, corporation, limited liability company or other collective investment vehicle, that is not registered as an investment company under theInvestment Company Actand has a class of equity securities listed for trading on a national securities exchange, provided that such equity securities may be created or redeemed on any business day at their net asset value per share.

The amendments became effective May 15, 2014.

See: FINRA Regulatory Notice 14-22.Related news: SEC Approves FINRA-Proposed Rule Change to Corporate Financing Rule (Fed. Reg.) (May 13, 2014); FINRA Proposes to Amend Rule 5110 (January 27, 2014).