Series 79: Evaluation Of Underwriting Compensation And Arrangements

Evaluation of Underwriting Compensation and Arrangements

Once the required information has been filed, FINRA’s Corporate Financing Department will review the proposed amount of underwriting compensation and determine whether it is unfair and unreasonable. For purposes of determining the amount of underwriting compensation, FINRA evaluates all items of value to be received from any source in connection with the underwriting. Besides the amount of the actual discount, commission, or fee received, Rule 5110 takes an expansive view of “items of value,” which include:

• • Reimbursement of expenses
• • Fees and expenses of underwriter’s counsel, finders’ fees, wholesaler’s fees, financial consulting/advisory fees, and fees of qualified independent underwriters
• • Equity securities or convertible securities
• • Special sales incentive items
• • Rights of first refusal to underwrite future offerings
• •&#