The Securities and Exchange Commission is proposing a new rule that would require research analysts to certify the truthfulness of their views, and disclose whether they have received any compensation related to the specific recommendation provided.

The proposed Regulation AC would require research reports to include a statement by the analyst certifying that the report accurately reflects their personal views. Research reports also must include a statement by the analyst certifying whether the recommendation is related to the analyst’s compensation. If there is any relation between the analyst’s compensation and the recommendation, that fact must be disclosed along with the amount of the compensation received, its source, and its purpose.

Research analysts must attest, on a quarterly basis, that any recommendations and views provided in public appearances during the prior quarter accurately reflected their personal views and were not related to any compensation they received or will receive. If an analyst is unable to provide those written certifications, he or she must provide his or her firm with an explanation and the firm must promptly provide that information to its designated examining authority. The firm would then have to disclose in all research reports prepared by that analyst for the next 120 days that the research analyst did not provide the certifications and the reasons for the failure to certify.

Regulation AC is part of an ongoing process by the SEC, NASD, the New York Stock Exchange, and the U.S. states to address conflicts of interest faced by research analysts.

http://www.sec.gov/news/digest/07-26.txt