FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

May, 2012:

Proposed Rule Change to Adopt FINRA Rule 5270 (Front Running of Block Transactions) in Consolidated FINRA Rule Book.

There are many variations of front running.  Generally, front running is a practice whereby a securities trader takes a position to capitalize on advance knowledge of a large upcoming transactions expected to influence the market price.  Likewise, block transactions involve large quantities of stock or large dollar amount of bonds held or traded.  As a general guide, 10,000 shares or more of stock and $200,000 or more worth of bonds would be described as a block.  However, these descriptions are for educational purposes only and are not designed to be complete in all material respects.  If you have any questions relative thereto, you should contact a qualified professional.

Financial Industry Regulatory Authority, Inc. (“FINRA”) (f/k/a National Association of Securities Dealers, Inc. (“NASD”)) recently filed with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to adopt NASD Interpretive Material (“IM”) 2110-3 (Front Running Policy) as FINRA Rule 5270 and amend the rule in several ways to broaden its scope and provide further clarity in relation thereto.

Text of Proposed Rule Change

In order to view the status of this FINRA proposal, please follow the highlighted link: