Is investing in IPOs risky, and what are FINRA rules 5130 and 5131?
Yes, IPO investments carry significant risk, including post-listing price volatility, limited company track record, and no guarantee of long-term performance. FINRA rules 5130 and 5131 are mandatory US regulations that require you to confirm you're not a "restricted person" and that you understand anti-flipping guidance before placing a US e-IPO order.
Key risks:
- Post-listing price volatility, especially in the first days or weeks.
- Limited public track record, making performance harder to predict.
- No guarantee of long-term performance.
- Less available information compared to established public companies.
Read the company's prospectus (the official SEC filing) linked on the IPO detail page before ordering. FINRA rule 5130 requires confirming you're not a "restricted person" (broker-dealer/finance-industry employee or immediate family); FINRA rule 5131 requires acknowledging anti-flipping guidance. Both are mandatory and cannot be skipped.
Related questions:
Q: What is a prospectus and where do I find it?
The official SEC filing with full company details; linked on the IPO's detail page.
Q: What is a "restricted person" under FINRA rules?
Someone (or their immediate family) employed in a broker-dealer or certain finance-industry role, barred from IPO participation.
Q: Who do I contact if I have a problem with my IPO order?
Pluang Customer Support through the app.