Series 24: 4.2.3. Conflicts Of Interest Disclosure With Public Offerings

4.2.3.  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 con