On June 1, 2009, the Financial Industry Regulatory Authority re-proposed its anti-rumor rule in Notice 09-29. Proposed Rule 2030 would prohibit member firms from circulating rumors about securities they know (or have reasonable grounds to believe) are false or misleading and likely to impact the price of the security. Also, the member would have to report any such rumor to FIN RA, if the member knows or has reasonable grounds to know that the rumor was originated or circulated for the purpose of improperly influencing the market price of a security.
The new proposal is similar to a widely-criticized earlier proposal, issued in November 2008, with some important distinctions. For example, the new proposal includes additional supplemental material to the effect that a statement is not considered a rumor “if it is clearly an expression of an individual’s or firm’s opinion, such as an analyst’s view of the prospects of a company.”
The supplemental material also carves out three exceptions that were not found in the earlier proposal:
- A rumor published by widely-circulated public media may be discussed, provided its source and unsubstantiated nature are disclosed.
- A rumor may be discussed among market participants, when necessary to explain market or trading conditions.
- Associated persons of a member may discuss a rumor among themselves, in order to evaluate the truthfulness of the rumor, provided its source and unsubstantiated nature are disclosed.
The new proposal also adds a requirement that member firms adopt written policies and procedures concerning how they will identify and respond to rumors.