In November 2024, the Financial Industry Regulatory Authority (FINRA) proposed changes to its core regulatory fees and select use-based fees – a total of 15 fees – to increase the self-regulatory organization’s revenues in the face of “significant expense growth.” These changes are scheduled to take effect over the course of the next several years, including a significant increase to the public offering review fee and a brand-new private placement filing fee starting July 1, 2025.
As issuers prepare to launch offerings in the third quarter of 2025, they should be aware of these additional expenses, which they are likely to bear. The public offering and private placement review fees will not impact issuers that do not engage a FINRA member broker-dealer in an offering.
Public Offering Review Fee
For public offerings in which a FINRA member participates, the underwriting terms and arrangements must be submitted to FINRA’s Corporate Financing Department for its review. This submission to FINRA generates certain fees, which are currently structured as a flat fee of $500 plus 0.015% of the proposed maximum aggregate offering price, capped at $225,500, or a flat fee of $225,500 for offerings filed by well-known seasoned issuers (WKSI) within the meaning of SEC Rule 405. Beginning July 1, 2025, the fee cap for non-WKSI filers will rise to $1,125,000 and for WKSIs to $270,000, with a gradual increase over five years to $560,000.
Private Placement Review Fee
FINRA members that sell private placements must file the private placement memorandum, term sheet, or other offering documents, as well as any retail communication that promotes or recommends the private placement, with FINRA’s Corporate Financing Department. Historically, these reviews have been conducted by FINRA at no cost; however, beginning July 1, 2025, private placement filings for offerings exceeding $25 million will incur a base fee of $300 plus an offering fee of 0.008% of the maximum offering proceeds, with a cap at $40,300. Reimbursements for these fees will not be considered underwriting compensation.
Takeaways
Issuers and FINRA members are advised to prepare for the implementation of these increased and new fees and consider their impact on future offerings from a budgetary standpoint and, in the case of private placements, to update expense reimbursement provisions of placement agent agreements (e.g., to ensure clarity regarding treatment of FINRA filing fees, which we expect would be reimbursable by the issuer outside any expense cap).
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If you have any questions, or would like additional information, please contact one of the attorneys on our Investment Funds team.