Securities Research Modernization Act

H.R. 3672, the Securities Research Modernization Act, would amend the Securities Act of 1933 to broaden the “research report” safe harbor. Specifically, it changes Section 2(a)(3) to: (1) replace the limit that the safe harbor applies only to “an emerging growth company” with a general reference to “an issuer”; (2) replace “the common equity” with “any” security; and (3) replace “such emerging growth company” with “such issuer.” In short, the bill expands the research-report exception so that broker-dealers may publish or distribute research about any issuer conducting a proposed registered public offering, and about any type of security being offered, rather than being limited to emerging growth companies and to common equity. The intended effect is to modernize and broaden the protections around research coverage during the capital-raising process, potentially increasing analyst coverage and market information for investors during offerings.