IPO Team – What role do research analysts play? – (14)

visibility. The JOBS Act permits a broker-dealer to publish or distribute a research report about an EGC that proposes to register an offering under the Securities Act or has a registration statement pending, and the research report will not be deemed an “offer” under the
Securities Act, even if the broker-dealer will participate or is participating in the offering. Since the dotcom bust of the early 2000s, the courts, the SEC and FINRA have imposed significant restrictions on the role of the research analyst and research’s relationship with investment bankers. The JOBS Act now prohibits any self-regulatory organization (“SRO”), such as FINRA, and the SEC from adopting any rule or regulation that would restrict a broker-dealer from participating in certain meetings relating to EGCs. Further, no SRO or the SEC may adopt or maintain any rule or regulation prohibiting a broker-dealer from publishing or distributing a research report or making a public appearance with respect to the securities of an EGC following an offering or in a period prior to expiration of alock-up (see “What is contained in the underwriting agreement?”). The JOBS Act also removes restrictions on who within an investment bank can arrange for communications between research analysts and prospective investors in connection with an EGC IPO, permitting investment bankers to be involved in those arrangements. Further, a research analyst is permitted to engage in communications with an EGC’s management when other employees of the investment bank, including the investment bankers, are present. 2
As the JOBS Act is so recent, there is as yet no common practice in this area, but historically financial
See “Frequently Asked Questions about Separation of

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s