Series 79: 11.4.1.1. Regulatory Requirements

11.4.1.1. Regulatory Requirements

In order for a FINRA member firm to issue a fairness opinion, it must have certain written procedures in place to ensure that the firm is properly vetting the fairness opinions its bankers are presenting to clients. These procedures must specify the process used to determine whether the valuation analyses used in the fairness opinion are appropriate. The procedures must also specify the circumstances under which a member will use a fairness committee to review and approve/disapprove fairness opinions. Where a fairness committee is used, the procedures must also specify how personnel are selected to serve on the committee, what qualifications are required to serve, and what process is used to promote a balanced review by the committee, including review by people who are not part of the transaction deal team.

If an investment bank issuing a fairness opinion to a company’s board of directors knows or has reason to know at the time it issues the opinion that the opinion will be provided or described to public shareholders, it must disclose the following conflict-of-interest information:

• If the investment bank has served