On October 21, 2026, the Financial Industry Regulatory Authority, Inc. (“FINRA”) published Regulatory Notice 26-19 announcing amendments to FINRA Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements) and Rule 5123 (Private Placements of Securities). The amendments are part of FINRA’s broader effort to modernize its rules and facilitate capital formation.
The amendments to Rule 5110, effective December 21, 2026, revise how securities treated as underwriting compensation are valued, replacing the existing “bona fide public market” standard with a valuation based on closing market prices on the acquisition date. The amendments also add exclusions for certain securities acquired in debt-for-equity exchanges and for capital investments in direct participation programs and unlisted REITs, extend existing treatment to certain non-convertible preferred securities and clarify requirements applicable to termination fees and tail fees.
The amendments to Rule 5123, effective October 21, 2026, expand the existing private placement filing exemption to include certain entities owning more than $5 million in investments and qualifying family offices with more than $5 million in assets under management. These changes reduce filing obligations for offerings sold to sophisticated investors and align the exemptions that are available from FINRA’s filing requirements with the SEC’s expanded definition of “accredited investor.” We had previously posted regarding these changes.
Separately, the Securities and Exchange Commission (“SEC”) approved FINRA’s proposed rule change to exempt qualifying collective investment trusts (“CITs”) from FINRA Rules 5130 and 5131(b) (see our prior post), which restrict purchases of new issues by restricted persons and prohibit certain allocations commonly referred to as “spinning.” The exemption is available to qualifying CITs that are not formed or maintained for the specific purpose of permitting restricted persons to invest in new issues. FINRA will announce the effective date of the CIT exemption in a separate Regulatory Notice.
Together, these changes reflect FINRA’s continuing efforts to simplify its regulatory framework while maintaining investor protections. Member firms should review their underwriting arrangements, private placement filing procedures and new issue allocation practices to assess the impact of the changes.
Access the FINRA Regulatory Notice.
Access the SEC Order.
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