The National Association of Securities Dealers is seeking comment on a proposed new rule that would establish procedures and disclosure requirements to address potential conflicts of interest when brokerage firms provide fairness opinions on mergers and acquisitions.

Investment banks typically provide fairness opinions in corporate control transactions, including: mergers and acquisitions; the disposition or divestiture of material assets, divisions or subsidiaries, and buybacks of outstanding securities.

Although fairness opinions are not required by statute or regulation, they have been a regular feature of corporate control transactions for nearly 20 years. Corporations disclose fairness opinions in various Securities and Exchange Commission filings and are often referred to by investors.

NASD is requesting comment on the best way to improve the processes by which investment banks render fairness opinions and manage and disclose inherent conflicts. The public comment period expires on Jan. 10, 2005.

“We are concerned that current disclosures in fairness opinions may not sufficiently inform investors about their potential conflicts and limitations, leaving investors unable to accurately assess the information and judgments they contain,” said NASD chairman Robert Glauber. “For instance, investors may evaluate a fairness opinion differently if they know that the investment bank rendering it has acted as financial advisor to one of the companies involved, and will receive compensation when the transaction is successfully completed.”