Series 22: 6.1.2. Organization And Offering Expenses

 6.1.2.  Organization and Offering Expenses

No FINRA member or associated person may participate in a public offering unless its underwriting terms and conditions are fair and reasonable. This specifically applies to underwriting compensation. All items of underwriting compensation must be disclosed in the prospectus or similar document.

In determining whether underwriting compensation is fair and reasonable, FINRA relies on the following factors:

• The size of the offering. Larger offerings tend to have lower percentage spreads than smaller offerings.

• The riskiness of the offering. Offerings where the underwriters are confident that they will sell the securities have lower percentage spreads than offerings where they lack confidence.

• The type o