January 2007 Archives
NASD Issues Notice to Members Regarding Research Analyst Rules
On January 24, 2007, NASD issued Notice to Members (NTM) 07-04 regarding the amendments to NASD Rule 2711 that were filed with the SEC for immediate effectiveness on September 27, 2006. In large part, the amendments codify existing interpretive guidance that had been set forth in joint interpretive memoranda issued by NASD and NYSE. However, the amendments also included requirements regarding third-party research reports, which had not been included in the joint memoranda. NTM 07-04 provides guidance on the requirements regarding supervisory review and approval of third-party research reports, and it contains two additional interpretations of Rule 2711 relating to the prohibitions on research analysts from participating in the solicitation of investment banking business and road show presentations.
White Paper - 2006 In Review: SEC, NASD, and NYSE Regulation
Selected Enforcement Cases and Developments Regarding Broker-Dealers
This Morgan Lewis White Paper focuses on selected U.S. Securities and Exchange Commission (SEC), NASD, and NYSE Regulation cases and developments in 2006 regarding broker-dealers. The number of disciplinary actions against broker-dealers varied by regulator in 2006. The SEC brought fewer cases this year than it did in 2005; NYSE Regulation initiated a slightly higher number of actions; and the NASD has not yet released statistics for 2006, but indications are that the number of cases it brought during the year may have declined compared to the number of cases brought in 2005.
SEC Adopts Rules Relating to Internet Availability of Proxy Materials and Proposes Universal Internet Availability of Proxy Materials
On January 22, the SEC adopted amendments to the proxy rules under the Securities Exchange Act of 1934 that allow, but do not require, issuers to furnish proxy materials to shareholders by posting them on an Internet website and providing shareholders with notice of the availability of the proxy materials. Issuers and other soliciting persons may use the “notice and access” model beginning on July 1, 2007. In a separate release, the SEC proposed additional amendments to the proxy rules, which would require issuers and other soliciting persons to use the notice and access model. If adopted, the proposed amendments would give all shareholders the ability to choose whether to receive proxy materials in paper form, via email, or via the Internet. Comments are due by March 30, 2007.
SEC Prposes Amendments to Antifraud and Eligibility Rules for Hedge Funds
On December 27, 2006, the SEC issued a proposal to adopt two new rules relating to hedge funds and other privately offered investment pools. First, the SEC proposed to expressly extend its antifraud authority under the Investment Advisers Act of 1940 (the Advisers Act) to registered and unregistered investment advisers’ conduct relating to investors and proposed investors in pooled investment vehicles. Second, the SEC proposed to increase the eligibility requirements for natural persons to be considered “accredited investors” with regard to certain investments in hedge funds and other privately offered investment pools. Comments on the proposal are due to the SEC by March 9, 2007.