RESEARCH

General

FINRA Topic Page:  Research Analysts

 

FAQs about FINRA’s Research Conflict of Interest Rules

FINRA Research Rules Frequently Asked Questions (FAQ)

 

Research Analysts

Covered Investment Fund Research Reports

The SEC adopted a new rule under the Securities Act of 1933 to establish a safe harbor for an unaffiliated broker or dealer participating in a securities offering of a covered investment fund to publish or distribute a covered investment fund research report. If the conditions in the rule are satisfied, the publication or distribution of a covered investment fund research report would be deemed not to be an offer for sale or offer to sell the covered investment fund’s securities for purposes of sections 2(a)(10) and 5(c) of the Securities Act of 1933. The SEC also adopted a new rule under the Investment Company Act of 1940 to exclude a covered investment fund research report from the coverage of section 24(b) of the Investment Company Act, except to the extent the research report is otherwise not subject to the content standards in self-regulatory organization rules related to research reports. Finally, the SEC adopted a conforming amendment to rule 101 of Regulation M, and a technical amendment to Form 12b-25.

Securities and Exchange Commission Release No. 33-10580 (November 30, 2018), 83 FR 641 (December 13, 2018): Covered Investment Fund Research Reports

 

Debt Research

Rule 2242 (Debt Research Analysts and Debt Research Reports) has been amended to clarify the application of the rule in four respects:  (1) The consent requirement for institutional debt research reports distributed to non-U.S. investors by non-U.S. affiliates of members; (2) the consent requirement for institutional debt research reports distributed to specified persons for informational purposes unrelated to investing in debt securities; (3) the scope of the institutional debt research report exemption when distributing third-party debt research reports to eligible institutional investors; and (4) the disclosure requirements for debt research analysts in public appearances. The implementation date was July 16, 2016.

 Securities Exchange Act Release No. 77963 (June 1, 2016), 81 FR 36628 (June 7, 2016) (File No. SR-FINRA-2016-017):  Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend FINRA Rule 2242 (Debt Research Analysts and Debt Research Reports)

 

Equity Research

FINRA Rule 2241 (Research Analysts and Research Reports) addresses conflicts of interest relating to the publication and distribution of equity research reports.

FINRA Regulatory Notice 15-30 (August 2015): SEC Approves Consolidated Rule to Address Conflicts of Interest Relating to the Publication and Distribution of Equity Research Reports

Supervision

Insider Trading

FINRA Rule 3110 (Supervision) includes a provision to help firms comply with their obligation under Section 15(g) of the Securities Exchange Act of 1934 to have policies and procedures in place reasonably designed to prevent potential insider trading. Rule 3110(d) requires that firms include in their supervisory procedures a process for reviewing securities transactions in certain types of accounts that is reasonably designed to identify trades that may violate insider trading prohibitions. When implementing these policies and procedures, firms may take a risk-based approach to monitoring transactions that takes into account their specific business models, and firms are encouraged to tailor their policies and procedures to their specific business models.

• FINRA Regulatory Notice 14-10 (March 2014):  SEC Approves New Supervision Rules

• SEC Fast Answers:  Insider Trading