Understanding FINRA Rule 6490 and Corporate Actions
Author: Destiny Aigbe
October 16, 2024
FINRA Rule 6490, effective since September 27, 2010, significantly enhanced FINRA's authority in the processing of corporate actions for companies trading on the OTC Markets. The rule requires companies to notify FINRA of actions such as stock splits, dividends, mergers, or symbol changes. The rule also gave FINRA more discretion in reviewing the accuracy of documentation, ensuring the protection of investors and maintaining orderly markets. Compliance with FINRA Rule 6490 is crucial, as failure to provide timely and accurate notices can lead to processing delays or rejections of corporate actions.
Key provisions of Rule 6490:
- Corporations must file with FINRA at least 10 days before the record date of the action.
- FINRA has the authority to halt or delay the processing of corporate actions if documentation is incomplete or inaccurate, or if the company is under regulatory scrutiny.
FINRA Gateway Update: The new FINRA Gateway, designed to streamline corporate actions processing, allows companies to submit, monitor, and update corporate actions through an online platform. This system promises more transparency, enhanced user functionality, and quicker response times for documentation updates.
About the Author
Destiny Aigbe
Managing Partner
Aigbe Law PLLC | Dark Alpha Capital
A Corporate and Securities Law Firm
With a robust foundation in law and finance, Destiny Aigbe has carved a distinguished career, underpinned by his pivotal role in orchestrating and managing complex transactions that have propelled companies to significant growth and market prominence. As a seasoned attorney and strategic advisor, Destiny has been instrumental in facilitating over $75 million in capital raises, demonstrating a keen acumen for securing funding and fostering investor confidence.
Destiny's leadership in the execution of six successful public listings, through meticulously structured reverse mergers and registration statements, showcases his adeptness in navigating the intricacies of the public markets and his capacity to guide companies through transformative growth phases. His involvement in five mergers as an operator further illustrates his versatile skill set, extending beyond legal expertise to include hands-on management and operational strategy, though these ventures did not involve funding.
Destiny's professional journey is marked by a commitment to excellence and a diverse range of experiences, from representing a wide spectrum of clients including public and private companies, and investment firms, to holding significant roles within the US government. His tenure with the US Department of State and the National Institutes of Health highlights his adaptability and his contribution to the advancement of entrepreneurial ventures in sectors like biotechnology and nanotechnology through strategic funding initiatives.
An alumnus of Vanderbilt University Law School, Destiny focused on Finance and Mergers & Acquisitions, further honing his expertise with a certificate in Law and Business. His foundational education in Finance was obtained with honors from the University of Maryland's Robert H. Smith School of Business, which laid the groundwork for his subsequent achievements in investment banking and legal practice.
Residing in the Washington, D.C. area, Destiny Aigbe continues to leverage his extensive experience and insightful leadership to drive innovation, growth, and success for his clients and the ventures he is involved with.
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