activities undertaken in connection with IPOs; however, it did not supersede the Global Settlement. The JOBS Act also eliminated certain quiet period restrictions on publication of research reports in offerings by emerging growth companies.


Research reports and offers Section 105 of the JOBS Act permits a broker-dealer to publish or distribute a research report about an EGC that proposes to register an offering of common stock under the Securities Act or has a registration statement pending, and the research report will not be deemed an offer under section 2(a)(3) of the Securities Act, even if the broker- dealer will participate or is participating in the offering. Section 105(a) of the JOBS Act defines a research report as “a written, electronic, or oral communication that includes information, opinions, or recommendations with respect to securities of an issuer or an analysis of a security or an issuer, whether or not it provides information reasonably sufficient upon which to base an investment decision” (our emphasis). This differs from the definition of a research report in the SRO rules and Global Settlement, where the information contained in the report must be reasonably sufficient to form the basis for an investor’s decision. Accordingly, the definition of research report for purposes of the JOBS Act would encompass nearly any written or oral communication relating to an EGC or its securities made by a broker-dealer. Section 105(a) of the JOBS Act provides that a research


report published by a broker-dealer about an EGC that is planning a public offering of common equity securities will not be considered an offer for purposes of section 2(a)(10) and section 5(c) of the Securities Act. As a result, the issuance of a written research report by a broker-dealer will not trigger a section 5 violation and would not constitute a written offer “by means of a prospectus” for purposes of potential liability under section 12(a)(2). By contrast, the JOBS Act does not provide an exemption from section 12(a)(2) liability for testing-the-waters communications under the JOBS Act, but only from section 5. Therefore, a research report would have greater protection from liability under the JOBS Act than testing- the-waters materials. Whether an oral research report may be subject to section 12(a)(2) liability is more complicated. The JOBS Act does not provide a safe harbour under section 12(a)(2) with respect to oral research reports. Consequently, an oral research report could still result in section 12(a)(2) liability if it is deemed to constitute an offer of a security. As a general matter, it is worth noting that the JOBS Act has no impact on liability under Rule 10b-5 or state anti-fraud laws.


Research participation in certain meetings Section 105(b) prohibits any SRO and the SEC from adopting any rule or regulation that would restrict a broker- dealer from participating in certain meetings relating to EGCs. 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 would be permitted to engage in any communications with an EGC’s management when other employees of the investment bank, including the investment bankers, are present. Under section 105(b) of the JOBS Act, an associated


person of a broker-dealer, including investment banking personnel, may arrange communications between research analysts and investors. This activity would include, for example, an investment banker forwarding a list of clients to the research analyst that the analyst could, at his or her own discretion and with appropriate controls, contact. In turn, a research analyst could forward a list of potential clients it intends to communicate with to investment banking personnel as a means to facilitate scheduling. Investment bankers can also arrange, but not participate in, calls between analysts and clients. In August 22 2012, the SEC’s Division of Trading and Markets published a highly anticipated series of JOBS Act Frequently Asked Questions entitled ‘About Research Analysts and Underwriters,’ which addressed various research-related matters. In the SEC FAQs, the SEC has stated that such arranging activity, without more, would not violate Finra Rule 2711 or NYSE Rule 472 although it notes that firms should be mindful of other provisions of the Exchange Act and the SRO Rules as well as the applicability of the Global Settlement.25 The JOBS Act prohibits a national securities association


or the SEC from maintaining rules restricting research analysts from participating in meetings with investment banking personnel and an EGC in connection with an EGC’s IPO. Before the enactment of the JOBS Act, research personnel were prohibited from attending meetings with issuer management that were also attended by investment banking personnel in connection with an IPO, including pitch meetings. Section 105(b) of the JOBS Act permits research personnel to participate in any communication with the management of an EGC concerning an IPO that is also attended by any other associated person of a broker, dealer, or member of a national securities association whose functional role is other than as an analyst, including investment banking personnel. The SEC has interpreted this section as


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