Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Friday, December 6, 2013

JOBS Act- Research Analysts and Underwriters

On September 28, 2012, the Financial Industry Regulatory Authority, Inc. (“FINRA”) proposed rule changes to the Securities and Exchange Commission (the “SEC”), for Rule 2711. The proposals are pursuant to the requirements of the Jumpstart Our Business Startups Act (the “JOBS Act”).
Analyst Communications
NASD Rule 2711(c)(4) and NYSE Rule 472(b)(5) presently prohibit research analysts from participating in communications with companies for the purpose of soliciting investment banking business or pitches aimed at such business.

Section 105(b) of the JOBS Act provides that research analysts may participate in initial public offering (“IPO”)related communications with the management of an emerging growth company (“EGC”) that are also attended by non-analyst personnel of a broker, dealer, or national securities association member, including investment banking personnel.
In it’s Frequently Asked Questions guide, the SEC took the position that research analysts may attend a pitch meeting in connection with an EGC IPO where investment banking personnel attend so long as the research analyst does not participate in soliciting investment banking business or engage in other prohibited conduct. Prohibited conduct includes: (i) changing research in an effort to secure investment banking business; (ii) giving “tacit acquiescence” to statements of EGC management that it expects favorable research coverage in exchange for investment banking business; (iii) providing views inconsistent with their personal views; and (iv) making misleading statements.
Under FINRA’s proposals, research analysts may attend EGC IPO pitch meetings that where investment bankers are present as long as the research analyst does not participate in soliciting investment banking business or engage in other prohibited conduct.
Investment banking firms should continue to recognize that investment banking personnel continue to be prohibited from directly or indirectly directing a research analyst to engage in sales or marketing efforts related to an investment banking services transaction under NASD Rule 2711(c)(6) and NYSE Rule 472(b)(6)(ii).
Quiet Period Restrictions
Section 105(d) of the JOBS Act prohibits the SEC or FINRA from adopting or maintaining any rule that prohibits any FINRA member from publishing or distributing research reports or making a public appearance for a prescribed period of time following an EGC IPO or prior to the expiration of a lock-up agreement entered into in connection with a securities offering of an EGC. The FINRA proposals eliminate NASD and NYSE quiet period restrictions regarding the publication or distribution of research reports or a public appearances by research analysts in connection with IPOs and secondary offerings of EGCs.
For more information about the JOBS Act please visit
For further information about this article, please visit and or contact Brenda Hamilton, Securities Attorney, 101 Plaza Real South, Suite 202 N, Boca Raton, Florida 33432, at (561) 416-8956 or by email This information is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings, please contact Hamilton and Associates at (561) 416-8956 or Please note that the prior results discussed herein do not guarantee similar outcomes.

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