The SEC has approved Rule 2290, proposed by the Financial Industry Regulatory Authority (“FINRA”) for its member firms in connection with the issuance of fairness opinions.[1] FINRA (formerly known as the National Association of Securities Dealers) originally proposed the Rule in

2005, to address concerns that disclosures in fairness opinions might not inform shareholders sufficiently about potential conflicts of interest between the issuer of a fairness opinion and the parties to the transaction.

While many investment banks already have disclosure and procedural practices that conform to many of the Rule’s requirements, upon effectiveness of the Rule most FINRA member firms will need to make some changes to their fairness opinion practices, although not as substantial as the changes that would have been required by FINRA’s original proposal.