The Securities Industry and Financial Markets Association wants regulators to give securities firms a freer hand in covering the IPOs of emerging growth companies as defined in the JOBS Act.
In
letters
sent on Friday to the Securities and Exchange Commission and the
Financial Industry Regulatory Authority Inc., Sifma said that current restrictions on the production of research reports and analyst communications conflict with provisions in the JOBS Act.
SIFMA also wants the SEC to negate portions of the 2003 Global Research Settlement that it says are inconsistent with the JOBS Act.
Finra Rule 2711 restricts how analysts produce research reports and interact with investment bankers. But the JOBS Act, signed into law by President Obama on April 5, prohibits the SEC or Finra from adopting or maintaining restrictions on analysts in covering companies with under $1 billion in revenue.
"We urge Finra to amend Rule 2711 to give effect to the JOBS Act or otherwise provide specific guidance," SIFMA said in its letter to Finra.
Specifically, the Wall Street trade group said that research blackouts around lock-up periods should be eliminated. And it wants follow-on offerings included under the relaxed rules.
In addition, SIFMA asked the SEC to "issue a rule superseding the portions of the Global Research Settlement that are inconsistent with the spirit of the JOBS Act."
The research settlement covered 10 securities firms, whIch agreed to pay nearly $1.4 billion for fines, independent research and investor education. The case arose from analysts recommending stocks of investment banking clients despite personal beliefs to the contrary.
The settlement contains restrictive provisions similar to the Finra rule.
State regulators on Tuesday said they opposed SIFMA's efforts.
“These [settlement] standards were put in place in response to enforcement actions brought by state and federal regulators to address a culture of corruption on Wall Street that allowed conflicted research to taint the investment process," Jack Herstein, president of the North American Securities Administrators Association Inc., said in a statement today.
"Now is the time to strengthen the protection of investors, not weaken these standards,” he said.
Finra spokeswoman Michelle Ong declined to comment. SEC spokesman John Nester had no immediate reaction to the Sifma letter.
A spokesman for Sifma did not respond to requests for comment Tuesday.
