For the past several years, the Financial Industry
Regulatory Authority (Finra) and its predecessor, the National
Association of Securities Dealers (NASD), have been preparing
and revising rules to address alleged abuses in connection with
In 2003, the NASD adopted NASD Rule 2790 (now Finra Rule
5130), Restrictions on the Purchase and Sale of Initial Equity
Public Offerings. Rule 2790/5130 was subsequently amended in
2005 and 2007.
Since the time Rule 2790 was first proposed, the NASD and
later Finra have been seeking to address particular problems
with the allocation and distribution of new issues. The
problem, generally, has been the perception that the general
investing public does not have the equal opportunity to access
potentially profitable new issues.
After several rounds of amendments, in September 2010, the
US Securities and Exchange Commission (SEC) approved Rule 5131,
New Issue Allocations and Distributions. As finally adopted,
Rule 5131 is...