Effect of New FINRA Anti-Spinning Rule on Private Funds

April 14, 2011
The Financial Industry Regulatory Authority, Inc. (“FINRA”) has adopted new Rule 5131, which addresses, among other things, abuses in the allocation of IPO shares by broker dealers, commonly referred to as “spinning.” Rule 5131 will impose additional restrictions on FINRA members and will in turn affect private funds seeking to invest in IPO shares. This update summarizes Rule 5131 and discusses the Rule’s impact on private funds.