Series 79 practice questioneasyFINRA Rules Applicable to Investment Banking
Which of the following is a key requirement under FINRA Rule 5130 for underwriters in a new issue of equity securities?
- AUnderwriters may sell new issues to their own employees
- BUnderwriters must allocate at least 10% of shares to retail investors
- CUnderwriters are required to disclose compensation only to FINRA, not investors
- DUnderwriters must not sell new issues to restricted persons, including certain employees and family members✓ Correct answer
Explanation
Why D — Underwriters must not sell new issues to restricted persons, including certain employees and family members
Rule 5130 prohibits sales to restricted persons, a cornerstone of new issue regulation. The other options misstate or fabricate requirements and are common exam traps.
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