Tag: FINRA Rule 5131

Initial Public Offerings and New Issues

Initial Public Offerings and New Issues

Posted on by SCM Communications

Trust and transparency are the cornerstones of the financial industry. This includes broker dealers. As part of this framework, the Financial Industry Regulatory Authority (“FINRA”) created Rules 5130 and 5131 to govern broker dealers regarding the issuance of new securities. FINRA Rule 5130 places restrictions on the purchase and sale of initial public offerings (“IPOs”). The primary goal of this rule is to prevent unfair allocation of new issues to industry insiders. Industry insiders include broker dealers, their associated persons, and immediate family members. If this restriction was not in place, the investing public may not have the opportunities that Read more about Initial Public Offerings and New Issues[…]

Spinning

Spinning

Posted on by admin

Spinning is the practice of allocating highly sought-after IPO shares, also known as hot stock, to individuals who are in a position to direct securities business to the firm. This is why portfolio managers are categorized as restricted persons. These individuals are in a position to direct business to a firm and may be willing to do so based on the size of their allocation. Spinning Prohibitions Rule 5131 prohibits the allocation of new issue shares to any account in which an executive officer or director of a public company or covered non-public company, or a person materially supported by Read more about Spinning[…]