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Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Partial Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Partial Amendment No. 1, to Exempt Specified Collective Trust Funds From FINRA Rules 5130 (Restrictions on the Purchase and Sale of Initial Public Offerings) and 5131(b) (New Issue Allocations and Distributions)
Plain English Summary
The Financial Industry Regulatory Authority (FINRA) has proposed a rule change that would exempt certain collective trust funds (CTFs) from specific regulations regarding initial public offerings and new issue allocations. This change primarily affects the trustees or managers of these funds, allowing them to operate with fewer restrictions. Agents should stay informed about this proposal and consider how it may impact their clients who invest in retirement plans that include CTFs.
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obligations on their trustees or managers. Further, the Exchange Act's “exempted security” definition includes “any interest or participation in a single trust fund, or a collective trust fund maintained by a bank, or any security arising out of a contract issued by an <span class="match">insurance</span> company, which interest, participation, or security is issued in connection with a qualified plan,” as defined in Section 3(a)(12)(C). Thus, by definition, CTFs can only accept investments from retirement plans meeting certain criteria, which FINRA stated further mitigates