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FINRA Amends Rules 2210 and 2241 to Conform to FAIR Act

The Financial Industry Regulatory Authority (FINRA) has amended its Rule 2210 (Communications with the Public) and Rule 2241 (Research Analysts and Research Reports) to conform to the requirements of the Fair Access to Investment Research Act of 2017 (FAIR Act) and subsequent rules adopted by the Securities and Exchange Commission (SEC). As background, the FAIR Act and related SEC rules establish a safe harbor under which unaffiliated broker-dealers may publish and distribute research reports on “covered investment funds” without the publication or distribution being deemed an offer of securities. For these purposes, the term “covered investment funds” generally includes registered investment companies, business development companies, and certain commodity- and currency-based trusts and funds.

The FAIR Act and related SEC rules also provide that a self-regulatory organization (SRO) cannot prohibit a member from publishing or distributing a covered investment fund research report solely because the member is participating in a registered offering or distribution of securities of a covered investment fund. Likewise, an SRO cannot prohibit a member from participating in a registered offering or other distribution of such securities solely because the member has published or distributed a covered investment fund research report about the fund or its securities.

To conform to these new requirements, FINRA has amended Rule 2210 to create a filing exclusion for covered investment fund research reports that qualify for the safe harbor described above. In addition, FINRA amended Rule 2241 to eliminate the quiet period restrictions on publishing a research report or making a public appearance concerning a covered investment fund that is the subject of a report.

More information is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume IX, Number 277
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About this Author

James M. Brady, Katten Muchin Law Firm, Finance Attorney
Associate

James Brady concentrates his practice in financial services matters.

While in law school, James was an editor of the Michigan Journal of International Law. He also served as a judicial intern to the Honorable Stephen J. Markman of the Michigan Supreme Court. http://www.kattenlaw.com/James-Brady

312-902-5362
Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange...

312-902-5452
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