IPO Allocations Rule: SEC-Approved FINRA Rule Governing Quid Pro Quo Allocations, Spinning, Penalty Bids, Lock-up Waivers and Other Practices in Initial Public Offerings

Sullivan & Cromwell LLP - October 18, 2010
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On September 29, 2010, the Securities and Exchange Commission approved new FINRA Rule 5131 regarding IPO allocations and related practices. The Rule was originally proposed as NASD Rule 2712 in 2003 and was amended several times since then, most recently in July 2010. The Rule applies to member firms involved in the distribution of a “new issue”, which is defined generally as any initial public offering of an equity security made pursuant to a registration statement or offering circular, subject to specified exceptions.