FINRA Rule 5122

Key Requirements

Members must:

• Provide investors with disclosure of:
  • how offering proceeds will be used; and
  • offering expenses and selling compensation.
• File the offering document and any retail communications with FINRA at or before first use. Amendments must be filed within 10 days.
• Use at least 85% of offering proceeds for business purposes, not for commissions, offering costs, or sales incentives.
• Ensure actual use of proceeds matches the disclosures provided to investors.
• Promptly correct any discovered noncompliance.

A private placement memorandum (PPM) is not required. If no PPM or term sheet is used, the member must provide another offering document containing the required disclosures.

Exemptions

The rule generally does not apply to:

• Offerings sold only to institutional or sophisticated investors.
• Certain Rule 144A and Regulation S offerings.
• Employee and affiliate offerings.
• Specified exempt products and securities.
• Offerings already subject to certain other FINRA filing rules.