Comment Letter on SECs Notice of a Proposal by FINRA to Adopt New Rule 5123, Private Placements of Securities

MFA submitted a comment letter to the SEC in response to its notice of a proposal by FINRA to adopt new Rule 5123, Private Placements of Securities. Rule 5123 would require FINRA members that offer or sell private placements, or participate in the preparation of disclosure documents to provide disclosures to each investor prior to sale describing the anticipated use of offering proceeds, and the amount and type of offering expenses and offering compensation. In the letter, we recommend that Rule 5123 be amended to exempt offerings made by private funds that rely on Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. In addition, we do not believe that such a disclosure requirement is consistent with the statutory scheme for the regulation of offerings by private funds in the federal securities laws.

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