What is a 5130?

What is a 5130?

FINRA Rule 5130 prohibits a broker-dealer from selling New Issues to accounts in which “Restricted Persons” have a beneficial interest.

What is a restricted person under Rule 5130?

Under Rule 5130, an investment company organized under the laws of a foreign jurisdiction is exempt if 1) it is listed on a foreign exchange for sale to the public; and 2) no person owning more than 5 percent of the foreign investment company is a Restricted Person.

Which of the following are defined as immediate family for purposes of FINRA Rule 5130 on IPO distributions?

(5) “Immediate family member” means a person’s parents, mother-in-law or father-in-law, spouse, brother or sister, brother-in-law or sister-in-law, son-in-law or daughter-in-law, and children, and any other individual to whom the person provides material support.

What is a 5131 covered person?

Rule 5131 restricts (so called “spinning”) brokers from selling new issues to accounts that are beneficially owned by persons that are executive officers or directors of public companies having specified relationships with the broker-dealer (and persons materially supported by such persons) (“Covered Persons”).

Can broker/dealers participate in IPOs?

Overview – The Rules – Rule 5130 prevents broker-dealers and portfolio managers from receiving shares of equity securities in IPOs (“new issues”).

Can financial advisors participate in IPO?

An IPO (initial public offering) advisor is a firm hired to help a company navigate the process of listing on a public exchange for the first time. The advisor is usually an investment banking firm that has specialized knowledge of the company and the sector in which it operates.

Who does FINRA consider immediate family?

FINRA interprets cousin in the “immediate family” definition to mean first cousins and not second or more distant cousins. 3.

Which statement is true regarding FINRA Rule 5130 that restricts equity IPO purchases?

Which statements are TRUE regarding FINRA Rule 5130 that restricts equity IPO purchases? The best answer is A. FINRA Rule 5130 restricts “industry insiders” from buying equity IPOs directly from underwriters. Investment clubs do not fall under the prohibition, as long their members are not restricted.

What is a covered person under FINRA?

(5) Definition of Covered Person For purposes of this Rule, the term “covered person” means any person, other than a Foreign Associate, registered with FINRA pursuant to Rule 1210, including any person who is permissively registered pursuant to Rule 1210.

What is a new issue under FINRA Rule 5130?

New Issue Rule: As defined under FINRA Rule 5130. Public Company: Any company that is registered under Section 12 of the Securities Exchange or files period reports pursuant to Section 15 (d) thereof.

What is section 5130 of the SEC Act?

SECURITIES OFFERINGS, UNDERWRITING AND COMPENSATION 5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings (1) A member or a person associated with a member may not sell, or cause to be sold, a new issue to any account in which a restricted person has a beneficial interest, except as otherwise permitted herein.

What is rule 5130 of the NASD?

5130. Obligation to Provide Information | FINRA.org 5000. TRADING OTHERWISE THAN ON AN EXCHANGE 5100. Reserved. 5130. Obligation to Provide Information This rule is no longer applicable. NASD Rule 5130 has been superseded by FINRA Rule 6150.

What is IPO Allocation rule 5131?

IPO Allocation Rule: As defined under FINRA Rule 5131. Limited business broker-dealer: Any broker-dealer whose authorization to engage in the securities business is limited solely to the purchase and sale of investment company/variable contracts securities and direct participation program securities.