On May 23, 2018, the Securities and Exchange Commission (the "Commission") proposed establishing a research report safe harbor (Rule 139b) for unaffiliated brokers or dealers that publish or distribute research reports that cover investment funds. The Commission took this action in furtherance of the mandate of the Fair Access to Investment Research Act of 2017 (the "FAIR Act"). The FAIR Act required the Commission to expand the Rule 139 safe harbor for research reports to cover research reports on investment funds. Rule 139 permits a broker or dealer that is distributing an issuer's securities to publish a research report about those securities without the report itself being deemed an offer to sell such securities. If adopted as proposed, the safe harbor would be made available to research reports on mutual funds, exchange-traded funds, registered closed-end funds, business development companies and similar covered investment funds. The safe harbor would be unavailable with respect to broker-dealers' publication or distribution of research reports about closed-end registered investment companies or business development companies during their first year of operation. The adoption of an expanded safe harbor would reduce obstacles that currently prevent certain investors from accessing research reports on investment funds. However, the safe harbor would not extend to research reports issued by brokers or dealers affiliated with the investment fund. The public comment period will remain open for 30 days. The proposed rule is available here.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2018. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.