4.6.4. Restrictions on the Publication of Research Reports and on Public Appearances
Member firms may not distribute a research report, and research analysts may make no public appearance, regarding a subject company for which the firm has participated in:
• An initial public offering, until 10 days have passed following the date of the offering (applies to any distribution participant)
• A secondary offering, until 3 days have passed following the date of the offering (applies to syndicate managers and co-managers)
This is called a quiet period. FINRA allows three exceptions:
1. There is no quiet period if the issuer is an EGC.
or
2. If a research report or public appearance is relevant to “the effects of significant news or a significant event on the subject company,” then the report may be released or the appearance made before the end of the quiet period.
or
3. There is no quiet period for research reports if the offering is a follow-on offering of an actively traded security (using the same definition as Regulation M) and meets certain other requirements, most notably:
» The issuer is a WKSI or seasoned issuer.
or
» The research report is a general report about the issuer’s industry that does not single out the issuer.
FINRA Rule 2241
SAMPLE QUESTION
Which of the following offerings has a quiet period for research analysts of 10 days?
A. An IPO by an EGC
B. An IPO by a company that is not an EGC
C. A follow-on offering by an EGC
D. A follow-on offering by a company that is not an EGC
Answer: B. The start date of an IPO or secondary offering is also the start of a quiet period imposed by FINRA, during which the underwriter’s research analysts may not publish research reports about the issuer, or make any public appearances related to the issuer. For IPOs, the quiet period is 10 days. For other offerings, the quiet period is three days. However, if the issuer is an emerging growth com