The settlement and related regulations such as NASD rule 2711 and NYSE rule 472 also include other provisions about disclosing conflicts, providing recommendations histories, and severing the links between the research and investment banking groups within the banks.
I also separately examine Sell recommendations since NASD rule 2711 emphasizes that they should be distinct from Holds.
Though some may view this literal interpretation as naive, it is consistent with the spirit of the Global Settlement and the plain-meaning mandate in NASD rule 2711 (h)(4) and the associated interpretation articulated by the NASD and NYSE (2002, page 375).
When splitting the CAR analysis into subsamples the results suggest that NASD Rule 2711 may have improved the credibility of Lead recommendations.
Since the adoption of NASD rule 2711, many brokers now report recommendations on a three-point scale.
3% of active Leads recommendations are Sells, and Figure 1 shows that most of these came after NASD rule 2711 was introduced in September 2002.
Also, rule 2711 triggered a wave of stoppages which, in many cases, were resumed within a few days.
Fan was fined $10,000 and suspended for 30 business days for violating NASD Rule 2711
by participating in efforts to solicit investment banking business from two public companies, and Alka Singh was fined $10,000 and suspended for six months after FINRA found that she attempted to arrange a concealed fee from a public company for which she provided research coverage.