Rule 5123 Requires the Filing of Private Placement Documents

Private Placement - Securities Lawyer 101
Securities Lawyer 101 Blog

The SEC recently approved Rule 5123 that any FINRA member firm selling an issuer’s securities in a non-public offering in reliance on an exemption from registration under the Securities Act is required to file copies of private placement materials such as memorandums, term sheets, or other offering documents with FINRA within 15 days after the first sale. INRA 5123 Notice Filing

Filings under FINRA Rule 5123 are treated as “notice” filings, and FINRA will not review or respond to the filing with a comment letter or provide a clearance letter.  FINRA will treat all documents filed as confidential.

FINRA 5123 & Providing Offering Documents

Rule 5123 requires that FINRA member firms submit their offering documents subject to Rule 5123 in searchable Portable Document Format (PDF).

FINRA Rule 5123 & Exemptions for Certain Purchasers

FINRA Rule 5123 is limited primarily to a private placement in Regulation D. Regulation D Offerings sold to certain categories of investors are exempt from FINRA Rule 5123:

♦ knowledgeable employees as defined in the Investment Company Act Rule 3c-5;

♦ eligible contract participants, as defined in Section 3(a)(65) of the Securities Exchange Act of 1934 (the “Exchange Act”);

♦ accredited investors described in Securities Act Rule 501(a)(1), (2), (3) or (7);

♦ institutional accounts, as defined in FINRA Rule 4512(c);

♦ qualified purchasers, as defined in Section 2(a)(51)(A) of the Investment Company Act;

♦ qualified institutional buyers, as defined in Securities Act Rule 144A;

♦ investment companies, as defined in Section 3 of the Investment Company Act;

♦ an entity composed exclusively of qualified institutional buyers, as defined in Securities Act Rule 144A;

♦ banks, as defined in Section 3(a)(2) of the Securities Act; and

♦ employees and affiliates of the issuer, as defined in FINRA Rule 5121.

FINRA Rule 5123 & Exemptions for Certain Offerings

Rule 5123 is not applicable to the following types of offerings:

♦ offerings of exempted securities, as defined in Section 3(a)(12) of the Exchange Act;

♦ offerings of non-convertible debt or preferred securities that meet the transaction eligibility criteria for registering primary offerings of non-convertible securities on Forms S-3 and F-3;

♦ offerings of securities issued in conversions, stock splits and restructuring transactions that are executed by an already existing investor without the need for additional consideration or investments on the part of the investor;

♦ offerings of securities of a commodity pool operated by a commodity pool operator, as defined under Section 1a(11) of the Commodity Exchange Act;

♦ business combination transactions as defined in Securities Act Rule 165(f);

♦ offerings of registered investment companies;

♦ standardized options, as defined in Securities Act Rule 238;

♦ offerings filed with FINRA under Rules 2310, 5110, 5121 and 5122, or exempt from filing thereunder in accordance with Rule 5110(b)(7);

♦ offerings made pursuant to Securities Act Rule 144A or SEC Regulation S;

♦ offerings of exempt securities with short term maturities under Section 3(a)(3) of the Securities Act and debt securities sold by members pursuant to Section 4(2) of the Securities Act so long as the maturity does not exceed 397 days and the securities are issued in minimum denominations of $150,000 (or the equivalent thereof in another currency);

♦ offerings of subordinated loans under SEA Rule 15c3-1, Appendix D;

♦ offerings of “variable contracts,” as defined in Rule 2320(b)(2); and

♦ offerings of modified guaranteed annuity contracts and modified guaranteed life insurance policies, as referenced in Rule 5110(b)(8)(E).

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit  This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship.  Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
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