How To Master Supervision Of Investment Banking

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Review of Underwriting Agreements by FINRA

All underwriting agreements must be submitted to FINRA’s Corporate Finance Department for review, no later than one day after the filing of any registration with the SEC or with any state regulator. If the offering is not required to be filed at either the federal or state level, the agreement must be filed with FINRA at least 15 business days prior to the anticipated offering date. In most cases, the agreement is submitted by the managing underwriter. FINRA will review the maximum total compensation to the underwriters to ensure that the underwriter’s compensation is fair and reasonable in light of the size and complexity of the offering. The submission must include:

  • The maximum offering price
  • The maximum underwriter’s discount
  • The maximum estimated reimbursement for underwriter’s expenses

Underwriter’s Compensation

The largest percentage of the underwriter’s compensation will come in the form of the underwriter’s discount. Other items received by the syndicate will also be considered compensation such as:

  • Reimbursement of cost usually not borne by the issuer
  • Options, rights, or warrants
  • Shares of the issuer
  • Finder’s fees reimbursed by the issuer

Expenses that are not considered when looking at the underwriter’s compensation would be:

The applicant is not required to provide information regarding:

  • Printing Costs
  • Accounting Fees
  • Blue Sky Fees


If the securities are being sold for a member firm, then the member firm that is the issuer is required to file the underwriting agreement with FINRA.

The following are all exempt from the filing of the underwriting agreement with the Corporate Finance Department:

  • U S Government securities
  • Municipal securities
  • Redeemable investment company shares
  • Variable contracts
  • Private placements
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