New Rules, Proposed Rules, Guidance and Alerts –

NEW RULES –

SEC Adopts New Rules Permitting Covered Investment Fund Research Reports –

On November 30, 2018, the SEC adopted Rule 139b under the Securities Act of 1933, substantially as proposed, establishing a safe harbor under which unaffiliated broker dealers may publish and distribute research reports on “covered investment funds” registered investment companies, BDCs and certain commodity- or currency-based trusts or funds—without such publication or distribution being deemed an offer of securities. Establishing this new safe harbor was mandated by the Fair Access to Investment Research Act of 2017.

Rule 139b permits two types of research reports: (1) issuer-specific research reports and (2) industry reports. Each type of research report must be published or distributed in a broker-dealer’s “regular course of business.” In addition—in a change from the proposal—final Rule 139b requires any performance information included in a research report to be presented in accordance with certain standardized requirements (e.g., mutual fund performance must be presented according to the requirements of Rule 482). For issuer-specific research reports, a fund must have been subject to periodic reporting requirements for at least 12 months and be current in its reporting. Funds included in an industry report must also be subject to periodic reporting requirements but there is no 12-month reporting history requirement.