FINRA Proposes to Adopt NASD Rules Regarding Research Analysts and Research Reports into FINRA Rulebook

FINRA filed with the SEC a proposed rule change to adopt, with modifications, NASD Rule 2711 ("Research Analysts and Research Reports") into the FINRA Rulebook and amend NASDRule 1050 ("Registration of Research Analysts") to create an exception from the research analyst qualification requirement.

FINRA proposed to incorporate NASD Rule 2711 into new FINRA Rule 2241 with the following:

• minor changes to the definition of "investment banking services" to clarify that such services include all acts in furtherance of a public or private offering on behalf of an issuer;
• clarification of the definition of "research analyst account" in that the definition does not apply to a registered investment company over which a research analyst has discretion or control, provided that the research analyst or a member of that research analyst’s household has no financial interest in the investment company, other than a performance or management fee;
• exclusion from the definition of "research report" communications concerning open-end registered investment companies that are not listed or traded on an exchange "mutual fund"; and
• move into the definitional section the definitions of "third-party research report" and "independent third-party research report" that are now in a separate provision of the rules.

See: Text of Proposed Rule Change.