Chapter 11.3

Question 1

Definition of Research Report

Answer 1

Any written communication that includes an analysis of equity securities of individual companies or industries, and that provides information reasonably sufficient upon which to base an investment decision. Research reports require written principal or supervisory analyst approval.

Question 2

Examples of reports which are not considered research reports because they do not provide information sufficient upon which to base an investment decision

Answer 2

• Discussions of broad-based indices
• Commentaries on economic, political or market conditions
• Technical analyses concerning the demand and supply for a sector, index or industry based on trading volume and price
• Statistical summaries of multiple companies financial data, including listings of current ratings
• Recommendations regarding increasing or decreasing holdings in particular industries or sectors; or
• Notices of ratings or price target changes, provided that the member simultaneously directs the readers of the notice to the most recent research report on the subject company that includes all current applicable disclosures required by this rule and that such research report does not contain materially misleading disclosure, including disclosures that are outdated or not longer applicable

Question 3

Excluded from the definition of a research report would be(even though they do provide information sufficient upon which to base an investment decision):

Answer 3

• Communications concerning open-end registered investment companies that are not listed or traded on an exchange
• Communications that constitute private placement memoranda and comparable offering-related documents prepared in connection with investment banking services transactions, other than those that purport to be “research”
• Any communication, even if it includes an analysis of an individual equity security, to fewer than 15 persons.

Question 4

Definition of research analyst

Answer 4

The associated person who is primarily responsible for, and any associated person who reports directly or indirectly to such a research analyst in connection with, preparation of the substance of a research report, whether or not any such person has the job title of “research analyst”

Question 5

Investment banking department

Answer 5

Any department or division, whether identified as such, that performs any investment banking service on behalf of a member firm

Question 6

Investment banking services

Answer 6

Include, without limitation, acting as an underwriter in an offering for the issuer; acting as a financial adviser in a merger or acquisition; providing venture capital, equity lines of credit, PIPEs, or similar investments or serving as a placement agent for an issuer, and all act in the furtherance of a public or private offering on behalf of an issuer

Question 7

Member of research analyst’s household

Answer 7

Means any related individual whose principal residence is the same as the research analyst’s principal residence

Question 8

Public appearance

Answer 8

Any participation in a call, seminar, forum, radio or tv interview, or other public speaking activity before 15 or more persons or before one or more representatives of the media, in which a research analyst makes a recommendation or offers an opinion concerning an equity security. This does not include password protected webcasts, conference calls, or seminar events with 15 or more existing customers, provided all participants previously received the most current research report

Question 9

Research analyst account

Answer 9

An account in which a research analyst or member of the research analyst’s household has a financial interest, or over which such an analyst has discretion or control, other than an investment company, provided that the research analyst or member of the research analyst’s household has no financial interest in the investment company other than a performance or management fee.
-Research analyst account shall not include a “blind trust” account that is controlled by a person other than the research analyst or member of the research analyst’s household, where neither the analyst nor members of the research analyst’s household knows of the account’s investments or investment transactions.

Question 10

Research department

Answer 10

Any department or division, whether or not identified as such - that is principally responsible for preparing the substance of a research report on behalf of a member firm

Question 11

Subject Company

Answer 11

The company whose equity securities are the subject of a research report or recommendation in a public appearance.