Alert May 24, 2011

SEC Approves FINRA Proposal to Amend New Rule 5131 to Simplify the Spinning Prohibition and Delay Implementation of Two Provisions

The SEC approved a FINRA proposal to amend new FINRA Rule 5131 (New Issue Allocations and Distributions) that simplifies, and delays implementation of, the Rule’s so‑called spinning prohibition, and also delays implementation of the rule’s provision prohibiting members from accepting market orders for the purchase of IPO shares in the secondary market prior to the commencement of trading for the IPO shares.  The implementation date for both provisions is delayed from May 27, 2011 to September 26, 2011.  The other provisions of the Rule will become effective on May 27, as originally scheduled.  For a more detailed description of the proposal approved by the SEC, see the April 19, 2011 Alert.