Restrictions on meetings between a research analyst and an issuer while the issuer is engaged in the underwriter selection process for an offering. FINRA considers the type and stage of an offering (pre-IPO period, solicitation period or post-mandate period) and the context created by the issuer to be particularly important in determining whether a broker-dealer violates NASD Rule 2711(c)(4) or 2711(e). FINRA considers communications by a research analyst with an issuer during a solicitation period, which begins when the issuer makes known that it intends to proceed with an IPO and ends when there is a bona fide awarding of the underwriting mandates, to carry an elevated risk. However, firms also must carefully assess the context and content of a request for information from an analyst by an issuer during an ostensible pre-IPO period to assess the risk of complying with an information request. FINRA considers that the risks associated with communications between an analyst and an issuer may be lower during a solicitation period for a follow-on offering than for an IPO.

Restrictions on research analyst communications with an issuer in a pre-IPO period. While the prohibitions in NASD Rules 2711(c)(4) and 2711(e) apply outside of a solicitation period and depend on the particular facts and circumstances, FINRA states that the risk of violating these provisions through communications between a research analyst and an issuer are lower during a pre-IPO period and can be effectively managed by a firm's policies and procedures. However, the FAQ clarifies that a pre-IPO period is not a safe harbor for analyst communications with an issuer and firms should have policies and procedures that address circumstances where issuer statements or questions suggest that an IPO determination has been made.

Restrictions on research analyst communications with an issuer in a post-mandate period. Similar to a pre-IPO period, FINRA believes that, the risks associated with communications between a research analyst and an issuer are lower during a post-mandate period and can be effectively managed by a firm's policies and procedures including allowing an analyst to communicate with the issuer the analyst's views on valuation, pricing and structuring of a transaction, even if the valuation or pricing assessment is positive. The risks associated with communications between an analyst and an issuer in a post-mandate period can be effectively managed, even when the issuer has not fully resolved the specific roles and economics for each designated firm, although there is no safe harbor in a post-mandate period. A firm should have policies and procedures that address circumstances that could lead to impermissible promises of favorable research, including where the issuer suggests the final roles or economics will be based on the highest valuation given by a firm's research analyst.

Consultations between investment bankers and research analysts during a solicitation period. This FAQ states that it would not be inconsistent with NASD Rule 2711(c)(4) and (e) for investment bankers to consult with analysts about valuation and other views during a solicitation period, subject to applicable requirements and a firm's policies and procedures to insulate research analysts from investment banking pressure. However:

Where an issuer creates an improper expectation that a firm's valuation will reflect a research analyst's view or analyst alignment with the investment bankers' view, a firm wishing to continue competing for a role in the offering must repudiate the overture and explain that any valuation provided represents the bankers' views only and that the firm cannot make any representations about the views of the research analyst and document this repudiation.

Application of the rules to EGCs. Section 105(b) of the JOBS Act allows research analysts to participate in any communication with the management of an EGC concerning an IPO that is also attended by any other associated person of a broker-dealer. This FAQ refers to Question 4 of the SEC's JOBS Act Frequently Asked Questions About Research Analysts and Underwriters (SEC FAQ 4), which interpreted Section 105(b). This FAQ clarifies that:

The FAQ states that firms should contact the SEC's staff if they have questions about the examples cited in SEC FAQ 4 or other particular communications by a research analyst during an EGC pitch meeting.

Providing an issuer with previously published research reports during a solicitation period. This FAQ states that it would not be inconsistent with NASD Rule 2711(c)(4) and (e) for a member's investment bankers to provide, or arrange for others to provide, to an issuer during a solicitation period its previously published research reports (or electronic access to those reports), on request by the issuer, as long as:

There would be an elevated risk of being viewed as impermissible conduct if an investment banker were to provide only its selection of reports or to comment on the reports.

Inappropriate communications or conduct by issuers. This FAQ clarifies that FINRA rules apply only to FINRA members. However, while FINRA rules do not govern the conduct of most issuers, where a FINRA member issues securities or functions as advisor to an issuer on an offering, FINRA expects members acting in those capacities to respect the regulatory obligations of other members that are participating, or competing to participate, in an offering. The FAQ states that it could be inconsistent with just and equitable principles of trade for a member acting in those capacities to request, induce or pressure another member to engage in conduct that, if agreed on, would violate Rule 2711.