Monday, April 4, 2011

Curtis Client Alert: FINRA Rule 5131 Effective May 27, 2011

FINRA Rule 5131, which will take effect on May 27, 2011, seeks to prevent certain abuses in the allocation and distribution of new issues. One of the abuses that Rule 5131 targets is the allocation of new issues to executive officers and directors of companies for which the FINRA member provides investment banking services, a practice commonly referred to as "spinning." In this Client Alert, we discuss the requirements and prohibitions under the Rule and applicable exceptions, with a particular focus on the Rule's implication for private investment funds.