Finra to begin requiring firms to file private placement term sheets

By Angela McDaniels

Tacoma, Wash., Sept. 5 - The Financial Industry Regulator Authority said the Securities and Exchange Commission approved a new rule that requires Finra member firms that sell an issuer's securities in a private placement to file a copy of the memorandum, term sheet or other offering document with Finra within 15 days of the sale date.

The new rule, Finra Rule 5123, applies to private placements that begin selling efforts on or after Dec. 3.

If a firm sells a private placement without using any offering documents, then it should indicate to Finra that it did not use any documents.

The rule exempts some private placements sold solely to qualified purchasers, institutional purchasers and other sophisticated investors.

Firms must file the offering documents electronically in searchable Portable Document Format through the Finra Firm Gateway.

In addition, effective Dec. 3, firms must submit filings about member firm private offerings, as required by Finra Rule 5122, through the Finra Firm Gateway.

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