Series 79 practice questionmediumCapital Structure and Regulation
Under FINRA Rule 5110, which of the following must an investment banker consider when advising a public company on a new equity issuance?
- AThe company’s minimum leverage ratio requirements
- BDisclosure of private equity investor identities
- CApproval from the SEC prior to pricing
- DRestrictions on underwriting compensation and arrangements✓ Correct answer
Explanation
Why D — Restrictions on underwriting compensation and arrangements
FINRA Rule 5110 focuses on restrictions to excessive underwriting compensation and arrangements. SEC pricing approval is not required; disclosure of private investor identities and leverage requirements are not covered by this rule.
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