FAQs About FINRA’s Research Conflict of Interest Rules
• Research Conflicts Rules – Part 1
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• Research Conflicts Rules – Part 2
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Amendments to FINRA Rule 2242 (Debt Research Analysts and Debt Research Reports)
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)
• FINRA Regulatory Notice 15-31 (August 2015): SEC Approves Rule to Address Conflicts of Interest Relating to the Publication and Distribution of Debt Research Reports.
The SEC approved the adoption of FINRA Rule 2241 (Research Analysts and Research Reports), a consolidated rule to address conflicts of interest relating to the publication and distribution of equity research reports. Provisions of Rule 2241 became effective December 24, 2015.
• 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
FINRA Rule 3110 (Supervision) includes a provision to help firms comply with their obligation under Section 15(g) of the SEA 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. Rule 3110 became effective on December 1, 2014.
• FINRA Regulatory Notice 14-10 (March 2014): SEC Approves New Supervision Rules
• SEC Staff Summary Report on Examinations of Information Barriers: Broker-Dealer Practices Under Section 15(g) of the SEA (September 2012)
• SEC Enforcement Actions: Insider Trading Cases