Underwriters, IPOs And Potential FINRA Problems

Law360, New York (August 3, 2010, 2:57 PM EDT) -- In the past decade, it has become increasingly common for investment banks to have venture capital, private equity or other investment affiliates that invest in private companies for their own account. As a result, in initial public offerings it has been increasingly common for an affiliate of an underwriter to be a stockholder of the issuer, or even to be a selling stockholder in the offering.

This situation can present issues under rules 5110 (Corporate Financing Rule — Underwriting Terms and Arrangements) and 2720 (Public Offerings...
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