Finra is continuing to shake up the way broker-dealers show the value of illiquid investments such as non-traded real estate investment trusts and private placements on clients’ account statements.
Last week, the board of governors of the Financial Industry Regulatory Authority Inc. authorized staff to issue a regulatory notice on the amendments to the rule.
The proposed amendments would change how client account statements showed an illiquid securities estimated value.
For example, the proposals include requiring broker-dealers to subtract upfront fees and expenses that are deducted from the offering proceeds if par value is listed as the estimated value of the shares. At the moment, shares of non-traded REITs, for example, are listed at par.
Another proposal would permit broker-dealers to use par value for the investment only under the initial offering period, and not during the secondary period.
And broker-dealers … read more here.