(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

SEC Approves Analyst Certification Rule

The Securities and Exchange Commission approved Regulation AC concerning analyst certification, which will require research analysts to certify the truthfulness of the views they express in their reports. The new rule also requires disclosure on whether the analyst received any compensation related to specific recommendations or views. This rule resulted from the Commission's concerns that the pressure on firms to seek and maintain investment banking business may be unduly influencing research reports.

Under Regulation AC, research reports from brokers, dealers and other covered persons will include a statement that the recommendations are the personal opinion of the analyst. Any compensation related to the report must be noted, including the purpose, the source and the amount of the compensation. Broker-dealers under Regulation AC will have to disclose all the public appearances of their research analysts. Under the rule, broker-dealers must include a written statement by the analyst that the views expressed are those of the analyst and that the analyst's compensation did not affect the views. If this certification is not given, the analyst must disclose its omission in all subsequent reports for the next 120 days.

The rule contains a number of exemptions, including for foreign analysts. Non-registered investment advisers are not covered and there is also an exemption for the media. Furthermore, this new rule has no affect on anyone not affiliated with a broker-dealer, staff told the Commission. The SEC staff noted, however, that none of the exemptions provide any exemption from other parts of the securities laws.

SEC Commissioner Harvey J. Goldschmid said he believes this new regulation offers only marginal gain. Although he called it a "patch of little consequence," he did vote for its adoption.

The regulation will be effective 45 days from the date of its publication in the Federal Register.

¨ The adopting release will be published in a forthcoming REPORT .