Independent investment Research Protocol

The World Assembly,
Acknowledges previous resolutions to protect the interest of investors (GAR#474);
Recognizing the reliance of investors on investment research written by analysts for decisions on financial instruments, especially on securities from jurisdictions outside of their own state or nation;
Noting that the views of analysts are not always favorable to particular stakeholders;
Anxious to protect the opinions of analysts for their independence, both from undue intervention by their employers and from frivolous or strategic litigation by other stakeholders;
Hereby defines :
“Analysts” as regulated and qualified financial analysts employed by a research department of an institution;
“Financial instruments” to include all securities, currencies, futures, options and all their respective derivatives traded in any WA member state;
“Institution” to mean a financial institution regulated by at least one member state;
“Investment research” as any written opinions and reports on financial instruments published by analysts under their own name on behalf of an institution in a member state and distributed to investors.
Hereby requires that:

  1. Institutions must:
    1.1. Impose information barriers, controlled by qualified staff, between their research department and any other department(s) that may have a material actual or potential conflict of interest with their research unit;
    1.2. Prohibit linking the compensation of analysts to the performance of any specific banking activities conducted by that institution;
    1.3. Prohibit any threats, or perceived threats, by another department of the institution against the analyst(s) or their research department(s) (or their respective compensation) over the contents of any investment research;
    1.4. Prohibit clearance or approval of investment research by persons employed by the institution who are not directly responsible for the research department, other than legal or compliance staff;
    1.5. Purchase adequate directors’ and officers’ liability insurance from a reputable insurer against any litigation directed at the institution, their research department(s) or their analysts.

  2. A published “investment research” report must disclose, in a very clear and legible font:
    2.1. Any material potential or actual conflicts as specified in clause (1)(a);
    2.2. Historical ratings and historical performance data pertinent to each of the said analysts who authored this report;
    2.3. If an entity that is the subject of the investment research has been provided with a copy the report prior to publication;
    2.4. Specifically disclose on the front page if (i) the investment research is published to support a client or proprietary position taken by that institution and/or (ii) is sponsored by any organization(s) with a material interest in the instruments covered;
    2.5. Any position(s) in any of the financial instruments mentioned in a report held by the analyst(s) who authored the report;
    2.6. Any other disclosures required by the competent authority of a member state with jurisdiction on the said report.

  3. In any litigation pending before any member state involving any published investment research:
    3.1. A petitioner against an analyst, a research unit, or the institution itself must prove beyond reasonable doubt of actual malice in any analysis and opinions published therein;
    3.2. The burden of proof is on the petitioner(s) in demonstrating actual malice and/or a reckless disregard for unambiguous factual statements published therein;
    3.3. The direction of any proprietary or client positions taken by any institution may not be admitted as evidence in any such litigation.

  4. A competent authority of a member state with jurisdiction is responsible for the implementation and interpretation of Clauses 1 and 2, and for any penalties that may be imposed.

More info here: NationStates • View topic - [PASSED] Independent investment research protocol

This resolution is now up for vote.

Bai Lung will vote FOR.

Independent investment Research Protocol was passed 13,040 votes to 2,193.