SECURITIES AND EXCHANGE COMMISSION

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-105873; File No. SR-FINRA-2026-007]

Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of

Filing of Partial Amendment No. 1 and Order Instituting Proceedings to Determine

Whether to Approve or Disapprove a Proposed Rule Change, as modified by Partial

Amendment No. 1, to Exempt Specified Collective Trust Funds from FINRA Rules 5130

(Restrictions on the Purchase and Sale of Initial Public Offerings) and 5131(b) (New Issue

Allocations and Distributions)

July 9, 2026.

I.

Introduction

On March 30, 2026, the Financial Industry Regulatory Authority, Inc. (“FINRA”), filed

with the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section

19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) 1 and Rule 19b-4 thereunder,2

a proposed rule change to exempt specified collective trust funds (“CTFs”) from FINRA Rule

5130 (Restrictions on the Purchase and Sale of Initial Public Offerings) and from paragraph (b)

(Spinning) of Rule 5131 (New Issue Allocations and Distributions).

The originally proposed rule change was published for comment in the Federal Register

on April 10, 2026.3 The public comment period closed on May 1, 2026. The Commission

received comment letters in response to the Notice.4 On May 14, 2026, pursuant to Section

1

15 U.S.C. 78s(b)(1).

2

17 CFR 240.19b-4.

3

See Exchange Act Release No. 105163 (Apr. 7, 2026), 91 FR 18493 (Apr. 10, 2026) (File No. SR-FINRA2026-007) (“Notice”).

4

The comment letters are available at https://www.sec.gov/rules-regulations/public-comments/sr-finra-2026007.

19(b)(2) of the Act,5 the Commission designated a longer period within which to approve the

proposed rule change, disapproved the proposed rule change, or institute proceedings to

determine whether to approve or disapprove the proposed rule change to July 9, 2026.6 On July

8, 2026, FINRA responded to the comment letters received in response to the Notice and filed a

partial amendment to modify the proposed rule change (“Partial Amendment No. 1”). 7

The Commission is publishing this order pursuant to Section 19(b)(2)(B) of the Exchange

Act8 to solicit comments on the proposed rule change, as modified by Partial Amendment No. 1

(hereinafter referred to as the “proposed rule change” unless otherwise specified), and to institute

proceedings to determine whether to approve or disapprove the proposed rule change.

II.

Summary of the Proposed Rule Change

As described in more detail in the Notice, and in Partial Amendment No. 1, the proposed

rule change would extend the general exemptions under Rule 5130(c)(1) and, by reference, Rule

5131(b)(2) to specified CTFs, thus treating them similarly to investment companies registered

under the Investment Company Act of 1940 (“Investment Company Act”) and common trust

funds, both of which are exempt under paragraphs (c)(1) and (c)(2) of Rule 5130, respectively,

and under Rule 5131(b) by reference. 9 The proposed rule change would exempt CTFs provided

that the fund was not formed or maintained for the specific purpose of permitting restricted

persons to invest in new issues.

5

15 U.S.C. 78a(b)(2).

6

See Securities Exchange Act Release No. 105487 (May 14, 2026), 91 FR 29201 (May 19, 2026). The

Commission designated July 9, 2026, as the date which the Commission shall approve or disapprove or

institute proceedings to determine whether to approve or disapprove, the proposed rule change.

7

See Letter from Demetri Lambros, Associate General Counsel, Office of the General Counsel, FINRA (July

8, 2026), https://www.sec.gov/comments/SR-FINRA-2026-007/srfinra2026007-953499-2942307.pdf; see

also Partial Amendment No. 1.

8

15 U.S.C. 78s(b)(2)(B).

9

See Rule 5131(b)(2).

2

According to FINRA, the proposed rule change is consistent with the provisions of

Section 15A(b)(6) of the Exchange Act.10 Specifically, the proposed rule change would apply

only to CTFs as described in Section 3(a)(12)(A)(iv) of the Exchange Act. FINRA stated that the

safeguards include the regulatory oversight inherent in these vehicles as well as the express

requirement that the CTF was not formed or maintained for the specific purpose of permitting

restricted persons to invest in new issues. FINRA stated that that the proposed rule change would

maintain the integrity of the public offering process while facilitating vibrant capital markets by

expanding access to initial public offerings (“IPOs”) through regulated pooled investment

vehicles. FINRA stated that this will benefit investors in CTFs by expanding the underlying

investment options in their employer-sponsored retirement plans and promote capital formation

by giving more investors access to IPOs through regulated entities that are not formed or

maintained to circumvent the purposes of the new issue rules.

As originally proposed in the Notice, the proposed exemption also would have included

the condition that the fund has investments from 1,000 or more plan participants and

beneficiaries of one or more employee retirement benefits plans.11 As discussed in FINRA’s

response to comments, and below, FINRA has determined that such a condition would be

difficult for CTFs to determine and is unnecessary in light of the regulatory oversight of CTFs

and the express requirement that the CTF not be formed or maintained for the specific purpose of

permitting restricted persons to invest in new issues.

10

15 U.S.C. 78o-3(b)(6).

11

See Notice, 91 FR 18495.

3

Both commenters on the Notice12 identified practical difficulties of implementing the

initially proposed condition that would require a CTF relying on the exemption to have

investments from 1,000 or more plan participants and beneficiaries of one or more employee

retirement benefits plan. Coalition noted that “the number of participants and beneficiaries who

have selected the CIT as an investment alternative changes every day.” ICI also stated that

“[p]articipant counts can fluctuate for reasons unrelated to any abuse risk (e.g., workforce

changes, plan mergers, or recordkeeping practices).” Both commenters explained that

determining the number of plan participants and beneficiaries would be especially challenging

where plan participants and beneficiaries invest in CTFs offered in their plans through omnibus

arrangements.

Both commenters discussed how CTFs operate under comprehensive regulatory and

fiduciary frameworks that protect investors. Coalition identified the following applicable

regulatory regimes: “in the case of CITs with national bank trustees, the Office of the

Comptroller of Currency (“OCC”) administers the OCC regulations; the Department of Labor

administers the Employee Retirement Income Security Act of 1974 (“ERISA”), which governs

virtually all CITs; and the state bank regulators oversee state-chartered CIT trustees.” ICI further

noted that CTFs maintained by banks are subject to banking supervision and examination. And

Coalition stated that “investment decisions regarding new offerings are made by professional

investment fiduciaries who owe a duty of loyalty to their investors and are prohibited from using

the assets they manage to influence a broker-dealer’s allocation of new offerings.”

12

See Letter from Clifford Kirsch, Partner, Everland Sutherland (US) LLP, on behalf of the Coalition of

Collective Investment Trusts to Vanessa Countryman, Secretary, SEC, dated May 1, 2026 (“Coalition”);

Letter from Tara R. Buckley, Deputy General Counsel, Investment Company Institute, to Vanessa

Countryman, Secretary, SEC, dated May 1, 2026 (“ICI”). Coalition refers to CTFs as collective investment

trusts, or CITs. In Partial Amendment No. 1, FINRA stated that it uses the term CTF in the proposed rule

change because it aligns with terminology used in the Exchange Act.

4

In Partial Amendment No. 1, FINRA stated that it generally agrees with the commenters

that eliminating this condition would not impact the integrity of the public offering process

because CTFs are subject to regulatory frameworks that impose fiduciary obligations on their

trustees or managers. Further, the Exchange Act’s “exempted security” definition includes “any

interest or participation in a single trust fund, or a collective trust fund maintained by a bank, or

any security arising out of a contract issued by an insurance company, which interest,

participation, or security is issued in connection with a qualified plan,” as defined in Section

3(a)(12)(C). Thus, by definition, CTFs can only accept investments from retirement plans

meeting certain criteria, which FINRA stated further mitigates potential risks. 13

In response to these comments, as discussed above, in Partial Amendment No. 1, FINRA

is proposing to eliminate the condition that “the fund has investments from 1,000 or more plan

participants and beneficiaries of one or more employee retirement benefits plan.” Accordingly,

the proposed rule change would apply to a CTF or similar fund as described in Section

3(a)(12)(A)(iv) of the Exchange Act, provided that the fund was not formed or maintained for

the specific purpose of permitting restricted persons to invest in new issues.

III.

Proceedings to Determine Whether to Approve or Disapprove File No. SR-FINRA2026-007 and Grounds for Disapproval Under Consideration

The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the

Exchange Act to determine whether the proposed rule change should be approved or

disapproved.14 Institution of proceedings is appropriate at this time in view of the legal and

policy issues raised by the proposed rule change. Institution of proceedings does not indicate that

the Commission has reached any conclusions with respect to the proposed rule change.

13

See 15 U.S.C. 78c(a)(12)(A)(iv).

14

15 U.S.C. 78s(b)(2)(B).

5

Pursuant to Section 19(b)(2)(B) of the Exchange Act, the Commission is providing notice

of the grounds for disapproval under consideration. 15 The Commission is instituting proceedings

to allow for additional analysis and input concerning whether the proposed rule change is

consistent with Section 15A(b)(6) of the Exchange Act, which requires, among other things, that

FINRA rules be designed to prevent fraudulent and manipulative acts and practices, promote just

and equitable principles of trade, protect investors and the public interest.16 The Commission

asks that commenters address the sufficiency of FINRA’s statements in support of the proposed

rule change, which are set forth in the Notice and in Partial Amendment No. 1, in addition to any

other comments they may wish to submit about the proposed rule change. In particular, the

Commission is instituting proceedings to allow for additional analysis of, and input from

commenters with respect to, the scope and implementation of the proposed rule change.

IV.

Procedure: Request for Written Comments

The Commission requests that interested persons provide written submissions of their

views, data, and arguments with respect to the issues identified above, as well as any other

concerns they may have with the proposed rule change. In particular, the Commission invites the

written views of interested persons concerning whether the proposed rule change is consistent

with the Exchange Act and the rules thereunder.

Although there do not appear to be any issuers relevant to approval or disapproval that

would be facilitated by an oral presentation of views, data and arguments, the Commission will

consider, pursuant to Rule 19b-4, and request for an opportunity to make an oral presentation. 17

15

15 U.S.C. 78s(b)(2)(B).

16

15 U.S.C. 78o-3(b)(6).

17

Section 19(b)(2) of the Exchange Act, as amended by the Securities Acts Amendments of 1975, Pub. L. 9429, 89 Stat. 97 (1975), grants the Commission flexibility to determine what type of proceeding—either oral

or notice and opportunity for written comments—is appropriate for consideration of a particular proposal

by a self-regulatory organization. See Securities Acts Amendments of 1975, Report of the Senate

6

Interested persons are invited to submit written data, views, and arguments regarding

whether the proposed rule change, as modified by Partial Amendment No. 1, should be approved

or disapproved by [INSERT DATE 21 DAYS FROM PUBLICATION IN THE FEDERAL

REGISTER]. Any person who wishes to file a rebuttal to any other person’s submission must file

that rebuttal by [INSERT DATE 35 DAYS FROM PUBLICATION IN THE FEDERAL

REGISTER].

Comments may be submitted by any of the following methods.

Electronic Comments:

•

Use the Commission’s internet comment form (https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number SR-FINRA-2026007 on the subject line.

Paper Comments:

•

Send paper comments in triplicated to Secretary, Securities and Exchange Commission,

100 F. Street, NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-FINRA-2026-007. The file number should be

included on the subject line if email is used. To help the Commission process and review your

comments more efficiently, please use only one method. The Commission will post all comments

on the Commission’s internet website (https://sec.gov/rules/sro.shtml). Copies of such filing will

be available for inspection and copying at the principal office of FINRA. Do not include

identifiable information in submissions; you should submit only information that you wish to

make available publicly. We may redact in part or withhold entirely from publication submitted

Committee on Banking, Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st

Sess. 30 (1975).

7

material that is obscene or subject to copyright protection. All submissions should refer to file

number SR-FINRA-2026-007 and should be submitted on or before [INSERT DATE 21 DAYS

FROM PUBLICATION IN THE FEDERAL REGISTER.] If comments are received, any

rebuttal comments should be submitted on or before [INSERT DATE 35 DAYS FROM

PUBLICATION IN THE FEDERAL REGISTER].

For the Commission, by the Division of Trading and Markets, pursuant to delegated

authority.18

Sherry R. Haywood,

Assistant Secretary

18

17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(57).

8