Function 5: Investment Banking and Research
FINRA gives this function 32 of 150 scored items. It covers public and private offerings, communications around offerings, corporate financing rules, Regulation M, M&A and tender offers, issuer reporting, and research supervision. The PrepPass Series 24 Study Guide teaches this function in depth, with the rule text, worked examples and a chapter quiz.
Offerings
Section 5 separates the quiet, waiting and post-effective periods. Rule 134 notices and free writing prospectuses are the main written communications allowed before effectiveness, and prospectus delivery rules apply before confirmations and in the aftermarket. Exemptions include Regulation D, Regulation A, Rules 144 and 144A, Regulation S and intrastate offerings.
FINRA corporate financing rules
FINRA reviews underwriting compensation (Rule 5110), polices conflicts of interest (Rule 5121), collects private placement documents (Rules 5122 and 5123) and restricts who may buy IPO shares and how they are allocated (Rules 5130 and 5131). Regulation M limits bids and purchases by distribution participants and governs stabilization.
M&A, reporting and research
Tender offers stay open at least 20 business days, and dealer-managers may not buy outside the offer. Issuers and holders file reports such as Schedules 13D and 13G, Section 16 forms and Form 13F. Research is separated from investment banking under Rule 2241, with quiet periods, disclosures and analyst certifications under Regulation AC.
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