Quick Answer
Research reports follow their own rules: a quiet period limits when syndicate members can publish them around an offering, selective early distribution to favored clients is prohibited, and third-party research must be labeled and reviewed before a firm distributes it.
These three rule sets (timing, distribution, and third-party sourcing) are tested separately, so treat each as its own checklist rather than one blended rule.
What Are Quiet Periods?
A quiet period restricts research analysts from publishing research reports about an issuer around the time of a securities offering. The purpose is to prevent research from being used as a marketing tool to hype the offering.
How Long Do Quiet Periods Last?
| Offering Type | Who Is Restricted | Quiet Period Duration |
|---|---|---|
| IPO | Syndicate managers and members | 10 days after the offering |
| Secondary offering | Managers and co-managers | 3 days after the offering |
| Secondary offering | Other syndicate members | No quiet period |
These rules are codified in the research-analyst rule and represent a significant reduction from the older quiet periods (40 days after an IPO for managers and co-managers, and 10 days after a secondary offering).
Exam Tip: Gotchas
- Research report quiet periods for IPOs are 10 days (not the old 40-day rule). For secondary offerings, only 3 days for managers/co-managers, and no quiet period at all for other syndicate members. The exam tests the current, shorter timeframes.
When Do Quiet Period Exceptions Apply?
The quiet period does not prevent a member from publishing a research report if:
- The issuer is an Emerging Growth Company (EGC)
- The offering involves a covered investment fund
- Significant news or a significant event occurs that affects the issuer, and legal or compliance personnel authorize the publication before it is issued
- For a secondary offering specifically, the 3-day restriction does not block the routine research-continuation exemption for a company with actively traded securities, or a research analyst's public appearance about that company
How Must Research Reports Be Distributed?
Why Is Selective Distribution Prohibited?
- Research reports must not be selectively distributed to internal trading personnel or particular customers in advance of other entitled customers
- Firms must have written policies and procedures to prevent selective distribution
- The goal is to ensure a level playing field; no customer gets an unfair informational advantage
What Counts as Fair Access?
When a firm publishes research, all entitled clients should receive it at substantially the same time. Giving a research report to a hedge fund client hours before retail clients would violate the selective distribution prohibition.
Exam Tip: Gotchas
- Selective distribution is prohibited. All entitled clients must get research at substantially the same time. Giving one client early access is a violation, even if the delay is only hours.
What Rules Apply to Third-Party Research?
Broker-dealers sometimes distribute research produced by independent firms. Special rules apply:
What Must Firms Do Before Distributing It?
- Third-party research reports must be clearly labeled as third-party research
- A registered principal or supervisory analyst must review and approve each report by signature or initials before it is distributed
- Firms may only distribute third-party research they believe to be objective and reliable
- Firms must review third-party research to ensure it contains no untrue statements of material fact and no false or misleading information; an independent third-party report is exempt from this specific content review, but not from the objectivity-and-reliability requirement
- Distributed third-party research must be accompanied by, or link to, the required material-conflict disclosure
When Does the Conflict-Disclosure Requirement Not Apply?
Independent third-party research is not considered "distributed" for purposes of the material-conflict-disclosure requirement only if it is:
- Made available upon customer request (the customer asked for it)
- Available through a member-maintained website (passive availability)
- Provided to a customer in connection with a solicited order where the representative informed the customer of the availability of independent research
This carve-out is narrow: it excuses only the conflict-disclosure requirement, not the labeling, review, or approval requirements above.
Exam Tip: Gotchas
- This "not distributed" carve-out only excuses the material-conflict-disclosure requirement. Labeling, principal or supervisory-analyst approval, and the objectivity-and-reliability review still apply.
- Firms must still review third-party research for accuracy before distributing it, even though they did not write it.
What Should You Check on Exam Day?
- Match the offering type (IPO vs. secondary) and role (manager/co-manager vs. other syndicate member) to the correct quiet period, or lack of one.
- Check for a quiet period exception: Emerging Growth Company issuer, covered investment fund, or a compliance-authorized significant-event report.
- Flag any early or favored access to research as a selective distribution violation, regardless of the delay's length.
- Distinguish active distribution (triggers labeling and review) from passive availability (website, customer request), which only narrows the conflict-disclosure requirement, not labeling or review.
- Confirm a principal or supervisory analyst signed or initialed approval before third-party research went out.
- For a secondary offering, check whether the actively-traded-securities exception permits research or a public appearance despite the 3-day quiet period.