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The development of US regulation of broker‐dealer research

The development of US regulation of broker‐dealer research Purpose – The purpose of this paper is to describe regulatory activities since the initial regulatory actions between 2001 and 2003 in response to securities firm research analyst conflicts of interest that were identified after the “internet bubble.” Design/methodology/approach – The paper describes a number of important regulatory activities, including: interpretive activities, such as the 2004 Second Joint Research Memorandum; establishment of a new licensing requirement for research analysts; additional rulemaking, in the form of 2005 changes to the SRO Rules that are meant to tighten those rules; the December 2005 report of the NASD and NYSE studying the operation and effectiveness of prior regulatory actions, including the SRO Rules; enforcement actions against both firms' and research analysts' behavior; industry sweeps gathering information regarding industry practices in respect of debt research; and rulemaking for purposes of implementing interpretive guidance and Joint Report. Findings – Following extraordinary and sweeping regulatory actions between 2001 and 2003, securities regulators have continued a high level of activity with respect to securities research. Research regulation stands as a hallmark for the current era of securities regulation for at least three reasons: it has displayed a wide range of regulatory tools including rulemaking, publication of interpretive guidance, “sweep” examinations, licensing, and enforcement, and has been largely “principles‐based” rather than prescriptive in nature; it is marked by complexity: a web of SEC, SRO, and informal or “best practices” regulation now exists covering every aspect of securities research; and it is a cornerstone of an emerging regulatory theme of heightened and more detailed compliance for investment banking operations. Originality/value – This is a valuable summary and analysis of seven years of regulatory activity on a complex issue by experienced securities lawyers http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Investment Compliance Emerald Publishing

The development of US regulation of broker‐dealer research

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References (1)

Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1528-5812
DOI
10.1108/15285810810886144
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to describe regulatory activities since the initial regulatory actions between 2001 and 2003 in response to securities firm research analyst conflicts of interest that were identified after the “internet bubble.” Design/methodology/approach – The paper describes a number of important regulatory activities, including: interpretive activities, such as the 2004 Second Joint Research Memorandum; establishment of a new licensing requirement for research analysts; additional rulemaking, in the form of 2005 changes to the SRO Rules that are meant to tighten those rules; the December 2005 report of the NASD and NYSE studying the operation and effectiveness of prior regulatory actions, including the SRO Rules; enforcement actions against both firms' and research analysts' behavior; industry sweeps gathering information regarding industry practices in respect of debt research; and rulemaking for purposes of implementing interpretive guidance and Joint Report. Findings – Following extraordinary and sweeping regulatory actions between 2001 and 2003, securities regulators have continued a high level of activity with respect to securities research. Research regulation stands as a hallmark for the current era of securities regulation for at least three reasons: it has displayed a wide range of regulatory tools including rulemaking, publication of interpretive guidance, “sweep” examinations, licensing, and enforcement, and has been largely “principles‐based” rather than prescriptive in nature; it is marked by complexity: a web of SEC, SRO, and informal or “best practices” regulation now exists covering every aspect of securities research; and it is a cornerstone of an emerging regulatory theme of heightened and more detailed compliance for investment banking operations. Originality/value – This is a valuable summary and analysis of seven years of regulatory activity on a complex issue by experienced securities lawyers

Journal

Journal of Investment Compliance – Emerald Publishing

Published: Jun 13, 2008

Keywords: Regulation; United States of America; Securities markets

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