Koger Addresses FINRA Rule 5131(b)

Jan. 15, 2013 - PRLog -- Koger, Inc. a leading provider of technology solutions to the financial services industry takes pride in their commitment to staying current with the latest industry and regulatory developments and incorporating them into their fund management solutions.  One of the more recent developments in Koger products addresses FINRA Rule 5131(b).

The Financial Industry Regulatory Authority (FINRA) is a private self-regulatory organization, funded by the financial industry that is responsible for governing business between brokers, dealers, and the investing public.  According to its mission statement, “FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry,” and essentially, “making sure the securities industry operates fairly and honestly.”

FINRA has been designated by the Securities and Exchange Commission (SEC) to develop and maintain a registration system for hedge fund advisors.  One particular mandate of gaining recent attention is FINRA Rule 5131, New Issue Allocations and Distributions, Part B, specifically prohibiting spinning -- the allocation of New Issues (IPOs of equity securities) by broker-dealers to investment banks in exchange for past, current, or future business -- unless the combined interests of these “covered individuals” comprise 25% or less of the fund.   In simplest terms, the purpose of this rule is to ensure that IPOs are in fact public offerings and not private or privileged offerings.   The rule also charges investment managers with the responsibility of obtaining written representation of their clients’ eligibility status and maintaining ongoing compliance with this rule (Financial Industry Regulatory Authority - http://www.finra.org).

Koger’s fund administration software, NTAS, includes features to support the FINRA Rule 5131b Spinning Restriction.  While the NTAS Rule Engine and Account Mapping functionalities make it possible to specify the percentage of Spinning Restricted assets at the portfolio, fund group, fund or account level, its Document Tracking functionality adds efficiency to the process of establishing the paper trail required to substantiate investor eligibility.

About Koger, Inc.

Established in 1994, Koger is a leading provider of technology solutions to the fund administration industry.  Koger’s flagship product, NTAS, is used by some of the largest and most respected financial institutions in the world. With offices in United States, Ireland, Slovakia and Australia, Koger provides comprehensive technical support 24/5.