Conforms primarily to language in JOBS Act.

[ by Howard Haykin ]

The NYSE adopted amendments to NYSE Rule 472, governing communications with the public.   These changes conform to the changes adopted by FINRA for research analysts and research reports in NASD Rule 2711 and FINRA Incorporated NYSE Rule 472.

FINRA amended these rules as it did primarily to conform to the requirements of JOBS (Jumpstart our Business Startups) Act – signed into law earlier this year.  The requirements serve to facilitate capital formation by “emerging growth companies” (“EGCs”) by improving information flow to investors.  FINRA also took into account guidance provided by SEC staffers who interpreted applicable JOBS Act provisions.   

Accordingly, the text now adopted to NYSE Rule 472 comports with the following provisions found in Section 105(d) of the JOBS Act, which prohibit the SEC or any national securities association from adopting or maintaining any rule or regulation in connection with an IPO of an EGC that:

• restricts, based on functional  role, which associated persons of a broker, dealer or member of a national securities association, may arrange for communications between an analyst and a potential investor; or
• restricts a securities analyst from participating in any communication with the management of an EGC 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 a securities analyst.

Section 105(d) further prohibits the Commission or any national securities association from adopting or maintaining any rule or regulation that prohibits a broker or dealer from publishing or distributing any research report or making a public appearance, with respect to the securities of an EGC either:

• within any prescribed period of time following the IPO date of the EGC;  or
• within any prescribed period of time prior to the expiration date of any agreement between the broker, dealer, or member of a national securities association and the EGC or its shareholders that restricts or prohibits the sale of securities held by the EGC or its shareholders after the IPO date.

FYI, the SEC’s Division of Trading and Markets published guidance on these provisions in the form of FAQs - that was done 8/ 2/12.

For further details, go to:   [NYSE Rule Filing 12-70, 11/27/12].