The SEC adopted new rules and amendments intended to encourage broker-dealers to publish research reports on SEC-registered investment companies and business development companies.
New Securities Act Rule 139b extends the current "safe harbor" available under Securities Act Rule 139 to a covered investment fund research report. Under the rule, a covered investment fund research report by a broker-dealer would not be considered an "offer for sale or offer to sell a security that is the subject of an offering," even if the broker-dealer is participating or may participate in a registered offering of the covered investment fund's securities. The safe harbor will not be available to a broker-dealer that is affiliated with an adviser to the relevant fund.
In addition, the SEC adopted new Investment Company Act Rule 24b-4, which would exempt covered investment fund research reports from ICA Section 24(b) filing requirements, except to the extent such reports are otherwise not subject to the content standards of self-regulatory organization rules related to research reports.
The SEC also adopted a conforming amendment to Regulation M Rule 242.101 and a technical amendment to Exchange Act Form 12b-25, as proposed.
The rules and amendments will become effective 30 days after their publication in the Federal Register.
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