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The main thread is on the NS gameside forum.
This is a fairly technical proposal and assumes some background knowledge in governance requirements in independence in investment research.
Clause 1 is based off the Global Analyst Research Settlements in 2003 and it is also very roughly based on Title V of the Sarbanes-Oxley Act). It is significantly less stringent than MIFID II in the EU.
Clause 2 is based on the imposition of the New York Times Co. v Sullivan standard on published opinions in research and basically requires an extremely high standard of proof for issuers from suing analysts for a negative opinion.
Clause 1(c)(i) and Clause 2(c) together restrict short-sellers from being sued on the grounds that their analysis is taking the same direction as their proprietary position. Clause 1(c)(ii) covers research published by nominated brokers in the UK and other jurisdictions that permit it.
I strongly consider this an international issue given that most investors (effectively, anyone with a retirement savings (or 401(k), occupational pension, superannuation, CPF, MPF, NSSF, etc depending on where you live) have some exposure to international bonds, equities, derivatives etc indirectly through their savings schemes and therefore benefit from global regulations on investment research, which significantly influences decisions made by investment managers on their behalf.
This issue is globally regulated in real life through MIFID II (for any institution doing business in the EU) and Global Analyst Research Settlements (and Series 16) for anyone doing business in the US.
IC: I also consider this issue to be worthy of commendation to our democratic socialist colleagues in WA since this imposes an additional burden of honesty on the part of investment banks, and that even if your WA member state is communist, you may still have investments in other capitalist states and this will still indirectly protect you.
All comments appreciated as always.
Category: Free Trade/Mild.
[box]The World Assembly,
Acknowledges previous resolutions to protect the interest of investors (GAR#474);
Recognizing the reliance of sophisticated investors on investment research written by analysts for decisions on financial instruments, especially on securities from jurisdictions outside of their own state or nation;
Noting that the views of analysts are not always favorable to particular stakeholders;
Anxious to protect the opinions of analysts for their independence, both from undue intervention by their employers and from frivolous or strategic litigation by other stakeholders;
Hereby defines:
"Analysts" as regulated and qualified financial analysts employed by a research department of an institution;
"Financial instruments" to include all securities, currencies, futures, options and all their respective derivatives traded in any WA member state;
"Institution" to mean a financial institution regulated by at least one member state;
"Investment research" as any written opinions and reports on financial instruments published by analysts under their own name on behalf of an institution in a member state and distributed to sophisticated investors only.
Hereby requires that:
This is a fairly technical proposal and assumes some background knowledge in governance requirements in independence in investment research.
Clause 1 is based off the Global Analyst Research Settlements in 2003 and it is also very roughly based on Title V of the Sarbanes-Oxley Act). It is significantly less stringent than MIFID II in the EU.
Clause 2 is based on the imposition of the New York Times Co. v Sullivan standard on published opinions in research and basically requires an extremely high standard of proof for issuers from suing analysts for a negative opinion.
Clause 1(c)(i) and Clause 2(c) together restrict short-sellers from being sued on the grounds that their analysis is taking the same direction as their proprietary position. Clause 1(c)(ii) covers research published by nominated brokers in the UK and other jurisdictions that permit it.
I strongly consider this an international issue given that most investors (effectively, anyone with a retirement savings (or 401(k), occupational pension, superannuation, CPF, MPF, NSSF, etc depending on where you live) have some exposure to international bonds, equities, derivatives etc indirectly through their savings schemes and therefore benefit from global regulations on investment research, which significantly influences decisions made by investment managers on their behalf.
This issue is globally regulated in real life through MIFID II (for any institution doing business in the EU) and Global Analyst Research Settlements (and Series 16) for anyone doing business in the US.
IC: I also consider this issue to be worthy of commendation to our democratic socialist colleagues in WA since this imposes an additional burden of honesty on the part of investment banks, and that even if your WA member state is communist, you may still have investments in other capitalist states and this will still indirectly protect you.
All comments appreciated as always.
Category: Free Trade/Mild.
[box]The World Assembly,
Acknowledges previous resolutions to protect the interest of investors (GAR#474);
Recognizing the reliance of sophisticated investors on investment research written by analysts for decisions on financial instruments, especially on securities from jurisdictions outside of their own state or nation;
Noting that the views of analysts are not always favorable to particular stakeholders;
Anxious to protect the opinions of analysts for their independence, both from undue intervention by their employers and from frivolous or strategic litigation by other stakeholders;
Hereby defines:
"Analysts" as regulated and qualified financial analysts employed by a research department of an institution;
"Financial instruments" to include all securities, currencies, futures, options and all their respective derivatives traded in any WA member state;
"Institution" to mean a financial institution regulated by at least one member state;
"Investment research" as any written opinions and reports on financial instruments published by analysts under their own name on behalf of an institution in a member state and distributed to sophisticated investors only.
Hereby requires that:
- Institutions must:
- Impose information barriers, controlled by qualified staff, between their research department and any other department(s) that may have a material actual or potential conflict of interest with their research unit;
- Prohibit linking the compensation of analysts to the performance of any specific banking activities conducted by that institution;
- Prohibit any threats, or perceived threats, by another department of the institution against the analyst(s) or their research department(s) (or their respective compensation) over the contents of any investment research;
- Prohibit clearance or approval of investment research by persons employed by the institution who are not directly responsible for the research department, other than legal or compliance staff;
- Purchase adequate directors' and officers' liability insurance from a reputable insurer against any litigation directed at the institution, their research department(s) or their analysts.
- A published "investment research" report must disclose, in a very clear and legible font:
- Any material potential or actual conflicts as specified in clause (1)(a);
- Historical ratings and historical performance data pertinent to each of the said analysts who authored this report;
- If an entity that is the subject of the investment research has been provided with a copy the report prior to publication;
- Specifically disclose on the front page if (i) the investment research is published to support a client or proprietary position taken by that institution and/or (ii) is sponsored by any organization(s) with a material interest in the instruments covered;
- Any position(s) in any of the financial instruments mentioned in a report held by the analyst(s) who authored the report;
- Any other disclosures required by the competent authority of a member state with jurisdiction on the said report.
- In any litigation pending before any member state involving any published investment research:
- A litigant against an analyst, a research unit, or the institution itself must prove beyond reasonable doubt of actual malice in any analysis and opinions published therein;
- The burden of proof is on the petitioner(s) in demonstrating actual malice and/or a reckless disregard for unambiguous factual statements published therein;
- The direction of any proprietary or client positions taken by any institution may not be admitted as evidence in any such litigation.
- A competent authority of a member state with jurisdiction is responsible for the implementation and interpretation of Clauses 1 and 2, and for any penalties that may be imposed.