FINRA Updates Private Placement Filer Form Pursuant to FINRA Rules 5122 and 5123

FINRA has updated the form that firms must use to file offering documents and information pursuant to FINRA Rules 5122 (Private Placements of Securities Issued by Members) and 5123 (Private Placements of Securities) (Filer Form). The updated Filer Form, which became available in the FINRA Firm Gateway in May of 2017, includes new and updated questions that will facilitate review of the filed material and eliminates other questions. 

The updated Filer Form adds, clarifies and removes certain questions or information in each of three sections as summarized below:

Participating Member Information

This section includes additional questions regarding whether the member making the filing is the exclusive selling agent in the private placement and whether there is any affiliation between any member participating in the private placement offering and the issuer or sponsor of the offering.  FINRA members will no longer be required to provide the title and email address for the contact persons of the FINRA member making the filing nor the contact name, title and telephone number for any other FINRA members identified in the filing.

Issuer Information

This section includes an additional question asking whether the issuer is a reporting company and no longer requires the name, title or email address of the contact person at the issuer.

Offering Information

This section includes additional questions regarding: (i) the type of security being offered; (ii) whether the issuer has raised capital in the preceding 12 months; (iii) the minimum investment amount and whether such minimum can be waived by the issuer; (iv) whether the FINRA member making the filing sold or will sell the offering to any non-accredited investors; (v) which Securities Act exemption the issuer is relying on; (vi) for contingency offerings, whether the contingency has been met as of the date of filing; and (vii) the date on which the FINRA member first offered or sold the private placement or whether sales have yet to commence.

The Offering Information section also no longer requires the filer to provide: (a) the aggregate amount of non-commission compensation; (b) the offering’s conclusion date; (c) whether the FINRA member used a term sheet; (d) whether the issuer has any independently audited financial statements; or (e) whether the issuer’s directors are independent.

In addition, the Offering Information section clarifies that the requirement to provide the stated or target rate of return is only relevant if the applicable offering documents state that the investment will provide an actual or target rate of return to investors, and clarifies that the question regarding the use of general solicitation is only asking whether either the FINRA member making the filing or the issuer has, in fact, engaged in general solicitation in connection with the private placement at or prior to the time of the filing.

For more information on the updates to the Filing Form, see FINRA Regulatory Notice 17-17.

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