| "Sec. 15D. SECURITIES ANALYSTS AND RESEARCH REPORTS. |
| "(a) Analyst Protections.--The Commission, or upon the authorization
and direction of the Commission, a registered securities association
or national securities exchange, shall have adopted, not later than
1 year after the date of enactment of this section, rules reasonably
designed to address conflicts of interest that can arise when securities
analysts recommend equity securities in research reports and public
appearances, in order to improve the objectivity of research and provide
investors with more useful and reliable information, including rules
designed-- |
"(1) to foster greater public confidence in securities research, and
to protect the objectivity and independence of securities analysts,
by-- |
"(A) restricting the prepublication clearance or approval of research
reports by persons employed by the broker or dealer who are engaged
in investment banking activities, or persons not directly responsible
for investment research, other than legal or compliance staff;
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"(B) limiting the supervision and compensatory evaluation of securities
analysts to officials employed by the broker or dealer who are not engaged
in investment banking activities; and
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"(C) requiring that a broker or dealer and persons employed by a broker
or dealer who are involved with investment banking activities may not,
directly or indirectly, retaliate against or threaten to retaliate against
any securities analyst employed by that broker or dealer or its affiliates
as a result of an adverse, negative, or otherwise unfavorable research
report that may adversely affect the present or prospective investment
banking relationship of the broker or dealer with the issuer that is
the subject of the research report, except that such rules may not limit
the authority of a broker or dealer to discipline a securities analyst
for causes other than such research report in accordance with the policies
and procedures of the firm;
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"(2) to define periods during which brokers or dealers who have participated,
or are to participate, in a public offering of securities as underwriters
or dealers should not publish or otherwise distribute research reports
relating to such securities or to the issuer of such securities; |
"(3) to establish structural and institutional safeguards within registered
brokers or dealers to assure that securities analysts are separated
by appropriate informational partitions within the firm from the review,
pressure, or oversight of those whose involvement in investment banking
activities might potentially bias their judgment or supervision; and |
"(4) to address such other issues as the Commission, or such association
or exchange, determines appropriate. |
| "(b) Disclosure.--The Commission, or upon the authorization and direction
of the Commission, a registered securities association or national securities
exchange, shall have adopted, not later than 1 year after the date of
enactment of this section, rules reasonably designed to require each
securities analyst to disclose in public appearances, and each registered
broker or dealer to disclose in each research report, as applicable,
conflicts of interest that are known or should have been known by the
securities analyst or the broker or dealer, to exist at the time of
the appearance or the date of distribution of the report, including-- |
"(1) the extent to which the securities analyst has debt or equity
investments in the issuer that is the subject of the appearance or research
report; |
"(2) whether any compensation has been received by the registered
broker or dealer, or any affiliate thereof, including the securities
analyst, from the issuer that is the subject of the appearance or research
report, subject to such exemptions as the Commission may determine appropriate
and necessary to prevent disclosure by virtue of this paragraph of material
non-public information regarding specific potential future investment
banking transactions of such issuer, as is appropriate in the public
interest and consistent with the protection of investors; |
"(3) whether an issuer, the securities of which are recommended in
the appearance or research report, currently is, or during the 1-year
period preceding the date of the appearance or date of distribution
of the report has been, a client of the registered broker or dealer,
and if so, stating the types of services provided to the issuer; |
"(4) whether the securities analyst received compensation with respect
to a research report, based upon (among any other factors) the investment
banking revenues (either generally or specifically earned from the issuer
being analyzed) of the registered broker or dealer; and |
"(5) such other disclosures of conflicts of interest that are material
to investors, research analysts, or the broker or dealer as the Commission,
or such association or exchange, determines appropriate. |
| "(c) Definitions.--In this section-- |
"(1) the term 'securities analyst' means any associated person of
a registered broker or dealer that is principally responsible for, and
any associated person who reports directly or indirectly to a securities
analyst in connection with, the preparation of the substance of a research
report, whether or not any such person has the job title of 'securities
analyst'; and |
"(2) the term 'research report' means a written or electronic communication
that includes an analysis of equity securities of individual companies
or industries, and that provides information reasonably sufficient upon
which to base an investment decision.". |
