Series 99: 1.2.4.1.3 Private Placements: Member Private Offerings (MPOs)

1.2.4.1.3  Private Placements: Member Private Offerings (MPOs)

A member private offering (MPO) is a private placement of unregistered securities issued by a FINRA member or a control entity. A private placement is a private securities offering that may be exempt from SEC registration if it meets certain qualifications described in Regulation D, related to advertising restrictions and the number and sophistication of its investors. A control entity is any entity that controls or is controlled by the member firm. In this case control means a beneficial interest of 50% of the outstanding voting securities. No member firm may participate in an MPO unless the following conditions have been met:

1. 1. If an offering has a private placement memorandum (PPM) or term sheet, it must be provided to each prospective investor and must contain disclosures addressing the intended use of the offering proceeds, the offering expenses, and the amount of selling compensation that will be paid to the syndicate members. If an offering does not have a PPM or term sheet, then the member must prepare an offering document that contains these required disclosures and must provide it to each prospective investor.
2. 2. A member must file the PPM or term sheet with FINRA prior to the time the document is first provided to any prospective investor. Any amendments or exhibits to the PPM or term sheet also must be filed within 10 days of being provided to any prospective investor.
3. 3. With any MPO, at least 85% of the offering proceeds must be used for business purposes, which do not include offering costs, discounts, commissions, or any other cash or non-cash sales incentives. The use of offering proceeds must be consistent with the PPM.

Offerings sold solely to institutional accounts, qualified purchasers, qualified institutional buyers, investment companies, and banks are exempt from the requirements of this rule. Nor does the rule apply to exempted securities, res