The Financial Industry Regulatory Authority has proposed amendments to NASD Rule 2711 and NYSE Rule 472 that would define “third party research reports” as any report produced by a person or entity other than a member, and create a further sub-category of “independent third party research.” The new-sub-category would be defined as research produced by an entity that has no affiliation or business or contractual relationship with a member or its affiliates reasonably likely to inform the content of its research reports, and that makes coverage and content determinations without any input from the distributing member or its affiliates. Members distributing independent third-party research to the public would be exempt from current rules requiring disclosure reviews and sign-offs affirming that the report contains no untrue statement of material fact or is otherwise not false or misleading.

Members distributing independent third party research would have to disclose the receipt of investment banking compensation from the issuer in the past 12 months or that will be sought in the next 3 months, ownership or 1% or more of any class of the subject company’s securities, if the member makes a market in the subject company’s securities and any other conflicts of interest. This disclosure would not be required when the third party independent research reports are made available by a member upon request, through a member-maintained website, or by a member to a customer in connection with a solicited order in which the registered representative informed the customer of the availability of such independent research.

 http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-18958.pdf