Investment Banks

Investment banking operations require compliance infrastructure at the intersection of FINRA's conduct rules and the structural obligations that govern underwriting, research, and M&A advisory. FINRA Rule 5110 regulates underwriting compensation — requiring FINRA filing and review for public offerings, disclosure of all forms of underwriting compensation, and compliance with lock-up and other restrictions on underwriting participants. Rule 5121 addresses conflicts of interest in public offerings where a broker-dealer has a material relationship with the issuer. Managing these obligations requires procedures, training, and active supervisory oversight of deal teams.

Information barrier obligations are foundational to investment banking compliance. Firms that maintain both an investment banking advisory function and a sales and trading or research function must maintain policies and procedures reasonably designed to prevent the misuse of material non-public information flowing from deal teams to trading desks or research analysts. The SEC and FINRA both have active enforcement programs in this area. Restricted list management, physical separation requirements, and transaction-based information barrier procedures must be documented and operational — not aspirational.