General Securities Sales Supervisor (Series10) Practice Exam

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What is required for members of an underwriting group according to FINRA regulations on IPOS?

  1. They can buy new issues for personal accounts

  2. Employees can purchase issues if not directly involved

  3. Family members of underwriters can purchase shares

  4. Only customers of the firm are allowed to buy new issues

The correct answer is: Family members of underwriters can purchase shares

The requirement for members of an underwriting group according to FINRA regulations on IPOs is that family members of underwriters can purchase shares. This reflects the understanding that while underwriters and their employees have restrictions regarding personal purchases of new issues to prevent conflicts of interest and ensure fairness in the distribution of shares, family members are often allowed to engage in these transactions under certain conditions. FINRA's rules have specific provisions that allow family members who are not directly involved in the underwriting process to participate in purchasing shares. This is to create a distinction between the personal trading of those who have direct access to the information and the opportunities a public offering presents, and their relatives who may not have the same level of access to sensitive information.

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