X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
For the ten Wall Street banks that settled with regulators this spring, complying with the agreement is no small task. Between new disclosure requirements, structural reforms, and many other duties, the firms have to enact sweeping changes. Below are some of the settlement’s key terms: MONETARY RELIEF -Firms will pay civil penalties and disgorgement totaling $875 million, including Merrill Lynch’s previous payment of $100 million in connection with its prior settlement with the states. -Under the settlement agreements, half of the $775 million payment by the firms (excluding Merrill Lynch) will be paid in resolution of actions brought by the SEC, NYSE, and NASD, and will be put into funds to benefit the firms’ customers. The states will get the remainder of the funds. STRUCTURAL REFORMS -The firms will separate research and investment banking, including physical separation, completely separate reporting lines, separate legal and compliance staffs, and separate budgeting processes. -Analysts’ compensation cannot be based directly or indirectly upon investment banking revenue or input from investment banking personnel. ENHANCED DISCLOSURES -Each firm will include a disclosure on the first page of each research report stating that it “does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.” -When a firm decides to terminate coverage of an issuer, it will issue a final research report discussing the reasons for the termination. INDEPENDENT RESEARCH -For a five-year period, each of the firms will be required to contract with no fewer than three independent research firms and will make available the independent research to the firm’s customers. -An independent consultant for each firm will have the final authority to procure independent research, and will report annually to regulators concerning the research obtained. -Payments for independent research will total $433 million. INVESTOR EDUCATION -Seven firms will make payments totaling $80 million for investor education. -The SEC, NYSE, and NASD have authorized that $53 million of these funds must be put into an investor education fund. VOLUNTARY INITIATIVE REGARDING INITIAL PUBLIC OFFERINGS -The firms entered into a voluntary agreement restricting allocations of securities in “hot” initial public offerings � offerings that begin trading in the aftermarket at a premium � to certain company executive officers and directors, a practice known as “spinning.” Source: U.S. Securities and Exchange Commission

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.