On November 30, 2018, the Securities and Exchange Commission (the “Commission”) adopted a new rule [1] establishing a non-exclusive research report safe harbor (“Rule 139b”) for unaffiliated brokers or dealers that publish or distribute research reports [2] regarding qualifying investment funds. The Commission took this action in furtherance of the mandate of the Fair Access to Investment Research Act of 2017 (the “FAIR Act”). The FAIR Act required that the Commission expand the Rule 139 safe harbor for research reports in order to cover research reports on investment funds.
The research safe harbor is now available to research reports regarding qualifying mutual funds, exchange-traded funds, registered closed-end funds, business development companies (“BDCs”) [3] and similar covered investment funds. Under the new safe harbor, the publication or distribution of a research report would not be deemed to constitute an “offer” under the Securities Act of 1933, as amended (the “Securities Act”), of the qualifying covered investment fund’s securities. The safe harbor is available even if the broker-dealer is participating in or may participate in a registered offering of the covered investment fund’s securities. Adoption of this safe harbor reduces obstacles that previously prevented investors from accessing research reports on investment funds.