FINRA Sets Effective Dates for Research Report Conflicts Rules

Broker-Dealer Compliance + Regulation

FINRA rules addressing conflicts of interest relating to the publication of equity research reports become effective on September 25, 2015, or December 24, 2015. Corresponding rules for debt research reports become effective on February 22, 2016.

Rule 2241 is designed to “foster objectivity and transparency” in equity research and provide investors with useful information with which to make investment decisions. The rule broadens the obligations of broker-dealers to identify and manage research-related conflicts of interest, but includes some flexibility in compliance. Among other things, the rule:

  • requires certain analysts to register and pass Series 86 and 87 exams
  • requires broker-dealers to disclose conflicts of interest in research reports and public appearances by research analysts
  • prohibits investment banking personnel from being involved in writing the content of research reports
  • prohibits investment banking personnel from determining how analysts are compensated
  • establishes an information barrier requirement inspired by the Sarbanes-Oxley Act
  • establishes a new standard for personal trading by research analysts

The rule becomes effective on September 25, 2015, or December 24, 2015, depending on the specific provision.

Rule 2242 is FINRA’s counterpart for debt reports. The rule reflects differences in the trading of debt securities, and includes broad exemptions for debt research distributed solely to eligible institutional investors. FINRA Rule 2242 becomes effective on February 22, 2016.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Broker-Dealer Compliance + Regulation | Attorney Advertising

Written by:

Broker-Dealer Compliance + Regulation

Broker-Dealer Compliance + Regulation on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.