On January 27, FINRA proposed amendments to its Private Placement Filer Form (Filer Form), which members are required to complete upon submission of private placement filings under FINRA Rules 5122 and 5123.
The Filer Form has three main components: (1) the “Participating Member Information” section, which seeks information about the members that are selling the private placement; (2) the “Issuer Information” section, which captures basic information about the issuer; and (3) the “Offering Information” section, which seeks information about the offering. The proposed changes to the Filer Form would add or clarify questions or other information requested in the Offering Information and Issuer Information sections to address three key categories of offering information: (1) contingency offerings; (2) the disciplinary history of the issuer, its principals and related parties; and (3) the use of proceeds. The proposed changes would be as follows:
- Contingency Offerings – The proposed changes to the Filer Form would add three additional questions if the offering is a contingency: (1) a request for the member to provide the date by which the contingency must be met; (2) a question asking if there have been any changes to the original terms of the contingency during the course of the offering (e.g., extension of the date by which the contingency must be met); and (3) a question regarding whether “the subscription process involves your firm receiving or transmitting investor funds in the offering.”
- Disciplinary History – The proposed changes to the Filer Form would add three additional questions if the issuer has disciplinary history: (1) the type of action or proceeding; (2) the approximate year that the event was initiated; and (3) the status of the event.
- Use of Proceeds – Additionally, the proposed changes to the Filer Form would reformulate the current question for use of proceeds by asking whether the issuer “intends to” use (rather than is “able to” use) offering proceeds to make or repay loans to, or purchase assets from, the listed persons.
FINRA also proposes to add a new question on whether the filing is subject to FINRA Rule 3280 for private securities transactions of an associated person. In addition, FINRA proposes updates to existing questions regarding a member’s date of first sale or offer, the Securities Act registration exemptions that apply, and what type of documents are being filed with FINRA.
Comments on the proposed amendments must be submitted within 21 days following their publication in the Federal Register.