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Qualified Independent Underwriter
Practical Law Glossary Item 7-383-6598 (Approx. 3 pages)
Glossary
Qualified Independent Underwriter
Often abbreviated as QIU. An underwriter required to participate in an SEC-registered offering in which:
- There is a conflict of interest under FINRA Rule 5121 (for example, when the issuer plans to use 5% or more of the offering proceeds to repay a loan extended by an affiliate of an underwriter).
- The offering does not meet any of the conditions in FINRA Rule 5121(a)(1), which sets out types of offerings in which a QIU is not required even if a conflict of interest exists.
A QIU must:
- Participate in the preparation of the registration statement and prospectus.
- Exercise the usual standards of due diligence in respect of the registration statement and prospectus.
To serve as QIU, an underwriter must meet the eligibility requirements set out in FINRA Rule 5121. For more information, including a discussion of these eligibility requirements, see Practice Note, Feeling Conflicted: FINRA's Qualified Independent Underwriter and Prominent Disclosure Rule and Standard Clause, FINRA 5121 Sample Prospectus Disclosure.