Series 7: 12.5.2. Conflict Of Interest Disclosure: Customer Transactions

12.5.2. Conflict of Interest Disclosure: Customer Transactions

Any member firm that has a conflict of interest related to a specific securities offering can only sell shares from that offering to customers under limited circumstances. A conflict of interest is said to exist when the broker-dealer is the issuer of securities, has a control relationship with the issuer of securities, benefits from at least 5% of the net proceeds of a securities offering, or will become an affiliate of the issuer or vice-versa as the result of an offering.

When any of these conditions apply, a member may still participate in a public offering under either of two circumstances:

1. The conflict of interest is prominently disclosed in the prospectus or offering document and one of the following conditions is met:

◊ The managing underwriter or other member responsible for managing the offering has no conflict of interes