Research: The Non-Participating Broker Safe Harbor

What this video covers

• The statutory domino effect: why a research report is a written communication, why any written communication that offers a security is a prospectus, and why an unfiled or noncompliant prospectus violates gun-jumping rules
• The three safe harbor conditions a principal must independently verify: non-participation in the distribution, publication in the regular course of business, and no consideration from any deal party
• Why compensation from a selling shareholder or any distribution participant defeats the safe harbor even when the issuer itself did not pay for the report
• Why sudden initiation of coverage to time an offering disqualifies the regular-course condition, and how Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) scrutiny of timing creates an exam trap
• The fundamental dividing line between non-participating brokers and participating brokers, and why a syndicate or selling-group role instantly eliminates the non-participating safe harbor
• The two participating-broker safe harbors: different-class research safe harbor (covering a separate security class from the offering) and regular-coverage safe harbor (requiring a covered issuer with strict size and reporting criteria)
• Why the non-participating safe harbor has no issuer eligibility threshold, while the regular-coverage safe harbor does, and what that distinction means for exam fact patterns
• What belongs in the principal's supervisory file: documentation of the safe harbor reliance itself (not just analyst certification or substance review), including pending underwriting bids that could compromise regular-course status