Further thoughts regarding research analysts conflicts of interest: The 2004 joint memorandum

Abstract

In March 2004, the NASD and the New York Stock Exchange (the “NYSE,” together with the NASD, the “SROs”) issued a joint memorandum (the “2004 Joint Memorandum”) that provides interpretative guidance on NASD Rule 2711 and the research analyst provisions of NYSE Rules 351 and 472, as amended in July 2003 (the “SRO rules”), and addresses issues raised by members regarding these rules. The SROs state in the 2004 Joint Memorandum that the guidance provided in their first joint memorandum issued in July 2002 (the “2002 Joint Memorandum”) continues to apply unless stated otherwise in the 2004 Joint Memorandum. This article will identify and discuss the major issues addressed in the 2004 Joint Memorandum and attempt to provide general guidance to practitioners seeking to understand the implications of these issues for their clients” research analysts’ activities. In analyzing the application of the SRO rules and derivative material, including the 2004 Joint Memorandum, the starting point always must be an understanding of what activities and materials the SRO rules address. The SRO rules apply to registered broker‐dealers that are members of either the NYSE or NASD (“member firm” or “member firms”) with research analysts who produce “research reports” and “public appearances” with regard to any “equity security” as defined in section 3(a)11 of the Exchange Act of 1934 (the “Act”).

Citation

Kroll, A.N. and Demaret‐Fleming, V. (2004), "Further thoughts regarding research analysts conflicts of interest: The 2004 joint memorandum", Journal of Investment Compliance, Vol. 5 No. 1, pp. 57-65. https://doi.org/10.1108/15285810410636046