following an offering or in a period before (although notably not after) expiration of a lock-up. The FAQs also clarify that the JOBS Act should be understood to apply to NYSE Rule 472 to the same extent as it applies to NASD Rule 2711. Further, the FAQs explain that the Staff views the prohibition on quiet period rules contained in section 105(d)(2) as applying to the quiet periods on research at the termination, waiver, modification, etc. of a lock-up agreement (in connection with an emerging growth company IPO or a follow-on offering) regardless of the means by which the lock-up period comes to a close.
Other restrictions on research The JOBS Act does not affect or amend most of the existing rules and regulations dealing with the separation of research and investment banking, even in relation to EGCs. The JOBS Act does not address or amend Regulation AC. The JOBS Act does not directly address the Global Settlement and, as the Global Settlement is a judicial order and not an SEC or Finra rule, it is technically not affected by the enactment of the JOBS Act. It is important to remember, however, that the Global Settlement only affects the eight remaining settling firms. All other broker-dealers not party to the Global Settlement are able to take advantage of the self-effectuating provisions of the JOBS Act described above. It remains to be seen whether the settling firms will petition the court for another amendment to the Global Settlement to conform to the provisions of the JOBS Act. The JOBS Act also does not address the existing research safe harbours, and it is unclear when the SEC will amend Rules 137, 138, and 139 to address the effects of the JOBS Act. The table in Appendix A compares the actions, as they relate to research and investment banking personnel, which are permitted before and after the enactment of the JOBS Act.29
The future of research To date, following enactment of the JOBS Act, most firms have proceeded cautiously in respect of research relating to EGCs. In the United States, there has not been (given traditional
restrictions on offering related
communications) any history of pre-deal research. It is not clear that firms will become comfortable with pre-deal IPO research even following the JOBS Act. Firms have published research reports on EGCs that have completed their IPOs; however, generally, these research reports have been published at least 25 days following completion of the IPOs. Even firms that are not parties to the Global Settlement have not been quick to publish research reports
JOBS Act Quick Start 71
immediately upon completion of the IPO. Over time, as practitioners become more comfortable with the new rules, and compliance departments of investment banking firms are able to adapt to these new rules, market practice may evolve. Commentators continue to emphasise the importance of availability to retail investors of information that is contained in research reports. The experiences in recent offerings have led many to advocate for additional changes related to research reports and to calls to require that any research views shared with institutional investors or with a limited number of investors be shared more broadly. We discuss these issues further in Chapter 9.
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