IPO Allocations Rule Update: FINRA Proposes Changes to Rule 5131 Governing IPO Allocations and Other Practices

Sullivan & Cromwell LLP - May 2, 2011

On April 18, 2011, FINRA filed additional changes to its recently adopted Rule 5131 which addresses IPO allocations in related matters. The changes would postpone the implementation date of paragraphs (b) (the anti-spinning provisions) and (d)(4) (restrictions on market orders) from May 27, 2011 until September 26, 2011. The changes would also eliminate paragraph (b)(1) of the Rule, which would have required members to establish, maintain and enforce policies and procedures reasonably designed to ensure that investment banking personnel have no involvement or influence, directly or indirectly, in the new issue allocation decisions of the member. All other provisions of the proposed Rule will take effect on May 27, 2011.