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ASA Sends Letter in Support of Rep. Sessions’ Small Business Research Legislation

On May 24, 2023, the American Securities Association (ASA) sent a letter to the U.S. House of Representatives' Committee on Financial Services in support of Representative Pete Sessions’ (R-TX) legislation codifying a U.S. Securities and Exchange Commission (SEC) staff no-action letter that allows brokers-dealers to continue to be compensated for providing research services without registering as investment advisers.

“We strongly support Rep. Sessions' bill that allows broker-dealers to receive ‘hard dollar’ payments for the research coverage of 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 will not be able to provide research on small businesses across America unless they become registered investment advisers, which would needlessly increase costs without any benefit to investor protection or market integrity. In other words, if the letter expires, then it would change the rules for no reason and 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 not to reverse 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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