FINRA Actions and the Due Diligence Obligations of Broker-Dealers in Private Placements

Publisher: Morrison Foerster
Author: Ze’-ev D. Eiger

Private placements and the due diligence obligations of broker-dealers in such transactions have recently come under increased scrutiny from FINRA as part of a broader trend reflected most notably in the filing requirements for private placements that went into effect on December 3, 2012 (FINRA Rule 5123).

This trend of increased scrutiny also is likely to continue in light of the SEC’s recent adoption of final rules relaxing the prohibition of general solicitation and general advertising for certain private placements under Rule 506 of Regulation D. For more information, read here.