[GA - PASSED] Independent Investment Research Protocol

Indepedent Investment Research Protocol
Category: Free Trade | Strength: Mild
Proposed by: Simone Republic | Onsite Topic​

The World Assembly,

Acknowledges previous resolutions to protect the interest of investors (GAR#474);

Recognizing the reliance of 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 investors.

Hereby requires that:

1. Institutions must:
   1. 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;
   2. Prohibit linking the compensation of analysts to the performance of any specific banking activities conducted by that institution;
   3. 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;
   4. 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;
   5. 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.
   
   
2. A published "investment research" report must disclose, in a very clear and legible font:
   1. Any material potential or actual conflicts as specified in clause (1)(a);
   2. Historical ratings and historical performance data pertinent to each of the said analysts who authored this report;
   3. If an entity that is the subject of the investment research has been provided with a copy the report prior to publication;
   4. 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;
   5. Any position(s) in any of the financial instruments mentioned in a report held by the analyst(s) who authored the report;
   6. Any other disclosures required by the competent authority of a member state with jurisdiction on the said report.
   
   
3. In any litigation pending before any member state involving any published investment research:
   1. A petitioner 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;
   2. The burden of proof is on the petitioner(s) in demonstrating actual malice and/or a reckless disregard for unambiguous factual statements published therein;
   3. The direction of any proprietary or client positions taken by any institution may not be admitted as evidence in any such litigation.
   
   
4. 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.

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