Series 87 flashcards
Series 87 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Research report definition
- A written or electronic communication that analyzes a security or issuer and gives enough information to base an investment decision, including a rating.
- Regulation AC certification
- The analyst must state that the views expressed accurately reflect personal views and that no part of compensation was, is, or will be tied to the specific recommendation.
- IPO quiet period
- A firm that managed or co-managed an IPO may not publish research on that issuer for 25 calendar days after the offering date.
- Secondary offering quiet period
- A firm that managed or co-managed a secondary offering may not publish research on the issuer for 10 calendar days after the offering.
- Reasonable basis requirement
- A recommendation must be supported by a reasonable basis, and reports may not contain material misstatements or omit facts that would make them misleading.
- Facts versus opinions
- Research reports must clearly distinguish factual statements from analyst opinions, estimates, and projections so readers are not misled about the certainty of the information.
- Rule 2242 debt research
- Applies to debt securities research; separate from Rule 2241 equity research and provides institutional-investor exemptions from certain disclosure and supervisory requirements.
- 1% ownership disclosure
- If the firm or an affiliate beneficially owns 1% or more of a covered company's equity securities, that ownership must be disclosed in the report.
- Anti-retaliation provision
- Members may not retaliate against a research analyst for issuing negative or unfavorable research, protecting analysts from pressure to produce favorable conclusions.
- Information barriers
- Investment banking personnel may not direct, supervise, or control research analysts or the content of research; written information barriers must separate the departments.
- Solicitation prohibition
- Analysts may not participate in pitching investment banking business or road shows; they may attend due diligence and discuss market conditions only in limited ways.
- Quid pro quo research
- Offering or threatening favorable or unfavorable research coverage in order to obtain or retain investment banking business is prohibited.
- Rating change for business
- Changing a rating or price target in response to investment banking pressure or to win a mandate violates FINRA Rule 2241.
- Analyst compensation limits
- Analyst pay may be based on overall firm revenue but not on specific investment banking transactions or on the specific recommendations the analyst makes.
- Analyst personal trading
- Analysts may not trade securities they cover in a way inconsistent with their published views; firms impose pre-clearance and restricted-period rules.
- Issuer-paid analyst compensation
- Analysts may not accept compensation, gifts, or payments from companies they cover if it could compromise objectivity; firms apply gift and entertainment limits.
- Public appearance definition
- Participation in a seminar, forum, radio or television interview, or other public speaking where an analyst recommends or gives opinions on securities; chat rooms are excluded.
- Retail communication definition
- A written communication distributed to more than 25 retail investors within any 30 calendar-day period; it requires principal approval before use.
- Correspondence definition
- A written communication sent to 25 or fewer retail investors within 30 calendar days; it is subject to supervisory review procedures rather than pre-approval.
- Fair and balanced standard
- Communications must be fair and balanced, must not omit material facts, and must not be misleading; risks must be presented as prominently as benefits.
- Principal pre-approval
- Research reports and most retail communications must be approved by a registered principal before first use or publication.
- Testimonial rules
- A testimonial about an analyst or firm must be genuine, disclose if the person was paid, and may not imply past performance predicts future results.
- Performance data disclosure
- Presentations of performance must disclose the time period covered, whether results are gross or net of fees, and the benchmark used.
- Projections in communications
- Forecasts and projections may be used only with a reasonable basis and must disclose assumptions, or be labeled as hypothetical with stated limitations.
- Rule 4511 retention period
- Books and records required under FINRA rules must be preserved for at least three years, with the first two years kept readily accessible.
- Research supervision procedures
- Written supervisory procedures must assign a registered principal to review research reports and analyst public appearances and to document that review.
- Annual compliance meeting
- Rule 3110 requires each registered representative to attend at least one annual compliance meeting covering relevant regulatory and firm topics.
- Regulation FD selective disclosure
- If an issuer discloses material nonpublic information to an analyst, the issuer must publicly disclose it; the analyst may not trade or tip others.
- Section 17(b) disclosure
- Anyone who publishes research about a security for consideration from an issuer or underwriter must disclose the amount and type of compensation received.
- Research analyst registration
- Research analysts must register with FINRA by passing the Series 86 and Series 87 exams, with the SIE as a prerequisite to the Series 87.
- Firm Element training
- Firms must provide annual Firm Element continuing education tailored to each registered person's business, based on a written needs analysis.
- OSJ inspection cycle
- Offices of supervisory jurisdiction must be inspected at least annually under Rule 3110(c); other offices follow a risk-based inspection schedule.