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ASA Applauds Rep. Sessions’ Small Business Research Legislation

Bill codifies SEC’s no-action letter allowing brokers-dealers to accept “hard dollar” payments for research reports


WASHINGTON, D.C. — Today, the American Securities Association (ASA) welcomed Representative Pete Sessions’ (R-TX) legislation codifying a U.S. Securities and Exchange Commission (SEC) staff no-action letter that excludes brokers-dealers who are compensated for providing research services from the definition of investment advisers.

“We applaud Rep. Sessions for introducing this bill to codify the SEC no-action letter giving broker-dealers the ability to receive ‘hard dollar’ payments to continue to provide research coverage for small public companies, who are the backbone of the American economy,” ASA CEO Chris Iacovella said. “If the SEC’s no-action letter expires in July, broker-dealers won’t be able to provide research on small businesses across America unless they become registered investment advisors, which would needlessly increase costs without any benefit to investors or markets. It makes no sense to import a European rule (MIFID II) into our markets that the Europeans have learned doesn’t work and are now seeking to repeal.”

ASA has long advocated for the SEC to refrain from reserving its no-action position including sending recommendations to the SEC Small Business Capital Formation Advisory Committee as well as a letter in 2019 calling on the SEC to codify, by rulemaking, the ability of broker-dealers to receive “hard dollar” payments for research from all institutional investors.

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