i. underwriting agreements

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II. THE FINRA REVIEW PROCESS Overview • The Financial Industry Regulatory Authority is the main self-regulatory organization for securities firms in the United States • All initial public offerings are subject to review by the Corporate Financing Department of FINRA • An offering may not proceed to pricing until a “no objections” clearance by FINRA is issued • Purpose of the review: • To review relationships and arrangements between the issuer and each underwriter, including underwriting compensation and all other “items of value” received or to be received by each underwriter • To determine whether the underwriting terms and conditions of the offering are fair and reasonable • To review compliance with the conflicts of interest rules under FINRA Rule 5121 • FINRA review process occurs in parallel with the SEC registration and review process • Initial filing with FINRA is essentially concurrent with the initial filing of the SEC registration statement 20
II. THE FINRA REVIEW PROCESS Underwriting Compensation In addition to the underwriters’ discount or commission, all “items of value” received by the underwriters and related persons “in connection with or related to the distribution of the public offering” are considered underwriting compensation, including: • Reimbursement of underwriters’ expenses, including fees and expenses of underwriters’ counsel • Finder’s fees, financial consulting and advisory fees • Rights of first refusal to participate in future financings All underwriting compensation must be disclosed in the underwriting section of the prospectus 21
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