FINRA Rule 5122 (2009) Requires private placement issuers controlled by / under common control of member to: 1.

Provide disclosures to each prospective investor about a. Issuers intended use of the offering proceeds b. Offering expenses c. Selling compensation paid to FINRA member and associated persons 2. File offering documents with FINRA Corporate Financing Dept. no later than first time offering documents are presented to prospective investors 3. Dedicate at least 85% of offering proceeds to business purpose identified in Use of Offering Proceeds disclosures in offer documents and spend funds consistent with the same a. Business purpose does not include offering costs, commissions, discounts, and any other cash or non-cash incentives. Ensure that: 1. Each offeree receives PPM, TS or other disclosure document 2. Document discloses intended use of offering proceeds and offering expenses in form of offering expenses and selling commissions 3. Document states that at least 85% of proceeds are used for stated business purpose in 4. Document, including exhibits and amendments, is filed with FINRAs Corporate Financing Department no later than the first presentation date of offer documents to prospective investors ( amendments and exhibits, within ten days of presentation to investor 5. B/D seeks accounting records from affiliate issuer to show that at least 85% of offering proceeds are going to business purpose of offering and that proceeds were spent consistent with use of proceeds disclosure, and
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Control: beneficial interest exceeding 50% of outstanding voting securities of corporation, or right to more than 50% of distributable profits / losses of non-corporate legal entity.
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Nothing in 5122 requires members to prepare PPMs they can satisfy all requirements with offering documents that dont meet additional Rule 502 requirements.