On October 17, 2012, the SEC approved changes to NASD Rule 2711, as administered by the Financial Industry Regulatory Authority (FINRA), and NYSE Rule 472, to bring both rules into compliance with the JOBS Act mandate to eliminate research quiet period restrictions with respect to emerging growth companies (EGCs) and liberalize analyst participation in pitch meetings for initial public offerings (IPOs) by EGCs. The rule changes largely are consistent with the Frequently Asked Questions (FAQ) posted by the SEC’s Division of Trading and Markets on August 22, 2012.

The primary changes to Rules 2711 and 472 address the research quiet periods in connection with IPOs and secondary offerings by EGCs, both prior to and following the expiration, waiver or termination of a lock-up agreement. Offerings for EGCs are now exempt from the 40-day quiet period (for managing underwriters and co-managers) or 25-day quiet period (for other syndicate members) for IPOs, the 10-day quiet period for secondary offerings and the 15-day quiet period prior to and following the expiration, waiver or termination of a lock-up agreement. As a result, FINRA no longer restricts the publication by research analysts of research following offerings by EGCs. The members of an underwriting syndicate for an IPO, however, may continue to voluntarily observe a 25-day quiet period so as to not publish research during the period in which the final prospectus is required to be delivered.