Conflicts of Interest Disclosure with Public Offerings
A member firm may not participate in a public offering if it has a conflict of interest with the issuer of the security, unless it meets certain conditions. Those conditions are described below.
A conflict of interest exists if any of the following apply:
- • The member firm is the issuer of the securities
- • The issuer or the member firm controls the other (owns at least 10% of the other firm’s debt or equity securities)
- • The issuer and the member firm are under common control (one individual owns at least 10% of the debt or equity securities of both entities)
- • At least 5% of the net proceeds from the public offering, exclusive of underwriting fees, are directed to the member firm (including affiliates and associates) to reduce or retire the balance of a loan or for any other reason
- • The member firm or the issuer will become an affiliate of the other as a result of the public offering and any other contemplated transactions between the two entities, or the member firm will become publicly owned
If a conflict of interest exists, the nature of that conflict must be prominently disclosed in the prospectus or offering d