Research Global Conflicts Policy
This represents a summary of certain polices adopted by B. Riley FBR, Inc. (“B. Riley FBR” or the “Firm”) concerning conflicts in connection with the production and/or dissemination of Investment Research.
Content And Integrity Of Research
Our research is produced for the benefit of our clients and our policies were created to ensure that research is independent, objective, fair and clear.
Research analysts are required to observe high ethical standards to ensure the integrity of research opinion. Research opinion is subject to content standards, including requirements that analyst have a reasonable basis for any opinion, and that opinions be balanced and accurately reflect the analyst viewpoint.
Our procedures require research analysts to immediately report any potential conflict to Research management and Compliance, who will review the potential conflict to ensure the independence and objectivity of analyst opinion is not compromised.
Research analysts are required to certify the opinion presented in reports and public appearances accurately reflect their views and that no part of the analyst’s remuneration was, is, or will be directly or indirectly related to specific recommendations or views expressed in such reports or appearances.
Identification Of Conflicts
Our policies address the requirement to identify and manage certain conflicts that may compromise the independence of our research analysts, including potential conflicts involving Research and Investment Banking, Research and Sales & Trading, and Research and other departments.
All our employees are provided copies of our policies and receive training on them, including training addressing the obligation of a research analyst to inform Research senior management and Compliance of any such potential conflict so that it can be reviewed and addressed before research is published.
Our policies include Information Barriers and other controls to restrict the sharing of information between Research and other departments.
Contacts between research analysts and investment Bankers generally require pre-approval by their supervisors and in certain circumstances are monitored or chaperoned by Compliance or Legal.
Our policies also require restricting and/or monitoring of Research during the period surrounding investment banking transactions and other potential restricted periods.
Our policies require Research supervisory approval of all research prior to its publication, with escalation to Compliance as appropriate, as well as a pre-approval process for all research analyst public appearances.
Supervision And Remuneration Of Research Analysts
The reporting line for all Research personnel, including senior management, is independent from Investment Banking.
Research has sole authority to determine which issuers will receive coverage and the timing and content of coverage, including termination of coverage.
Research analyst remuneration is determined by Research senior management and reviewed by a Research Analyst Compensation Committee, which includes members from outside the Research Department but does not include anyone from Investment Banking. Research analyst remuneration is based on a number of factors, including the quality, scope, and depth of analyst coverage. Analysts are eligible to receive bonus compensation that is based on overall operating revenues, including revenues generated by Investment Banking and Sales & Trading. Investment Banking has no input to analyst compensation or the Research Department’s budget.
Research Analyst Activities
Research analysts are not permitted to engage in activities that would compromise the objectivity or integrity of their research
Analysts are not permitted to engage in ‘pitches’ for new business, or ‘road shows’ for new issues of financial instruments, or otherwise engage in marketing of investment banking transactions.
Analysts are not permitted to engage in joint appearances with an issuer or Investment Banking to our Sales & Trading personnel or to clients in connection with an investment banking transaction.
Analysts may engage in vetting or due diligence and certain other activities as approved in connection with potential or actual Investment Banking clients or transactions.
While research analysts are not permitted to engage in solicitations or marketing of specific investment banking transactions to clients, they may serve an educational role for both Sales & Trading and clients in connection with an investment banking transaction.
Research analyst involvement in any activities in connection with a potential or actual investment banking transaction, including vetting or diligence, must be approved by Research senior management and Compliance.
Inducements And Inappropriate Influences
Research analysts are prohibited from receiving any inducement from an issuer or otherwise in connection with research opinion.
Research analysts are not permitted to disseminate proposed initiations of coverage, research opinion, changes in research opinion, and terminations of research opinion outside of the Research Department until published, with certain exceptions specifically approved by senior management and Compliance.
Research analysts are prohibited from directly or indirectly offering favorable research, a specific rating, a specific price target, or threatening to change the timing or content of research or threatening to drop coverage in connection with or in exchange for investment banking and/or sales & trading business.
Investment Banking personnel are prohibited from directing a research analyst to engage in marketing efforts.
Research analysts are prohibited from agreeing to be restricted by an issuer concerning the use of information received from an issuer and must notify Research senior management and Compliance of any such approach.
Research analysts are required to immediately report to Research senior management and Compliance any retaliatory actions by employees or issuers.
All employees are prohibited from engaging in retaliatory action against a research analyst related to analyst opinion.
Research analysts are required to certify the opinions expressed in reports and appearances represent their personal view and that no part of their compensation was, is, or will be directly related to the specific recommendation or viewpoint expressed by the analyst in the report or appearance.
Research analysts are prohibited from engaging in any conduct that would result in them being unable to provide the aforementioned certification.
The Research Department is physically separated from all other offices, including Investment Banking, Sales & Trading, and other departments.
Method And Timing Of Publication
Information concerning the timing and content of unpublished Research opinion is limited to Research and Compliance, with certain exceptions specifically approved by Research senior management and Compliance.
Research is distributed to clients and employees simultaneously through the Firm’s usual distribution channels. Prior to its distribution, research report content may not be communicated to anyone except as specifically approved by senior management and Compliance.
When we are involved in particular investment banking or capital markets transactions, we may restrict the distribution of research opinion. Similarly, if research analysts are in possession of material non-public information concerning the issuer, they are required to notify Compliance and will be restricted from publishing or making appearances concerning that issuer. We may also restrict research for other reasons, including required regulatory quiet periods and other business or legal reasons.
Personal Account Trading
Research analysts are subject to personal trading procedures that generally prohibit ownership of issuers they cover, as well as issuers in the same industry, and analysts are generally prohibited from trading in the securities of other issuers about which they possess knowledge of any pending unpublished research opinion. Analysts are required to make written representations concerning these conditions and obtain pre-approval for all transactions prior to trading.
Research analysts’ outside business activities must be pre-approved by Research senior management and Compliance. Analysts are prohibited from engaging in outside business activities with issuers they cover and other outside business activities that would compromise their independence and objectivity. Analysts are prohibited from serving as officers or directors of public companies.
Disclosure Of Interests
Our research reports provide disclosures as required by applicable regulations and by our policies, including:
a description of our rating system
the distribution of our ratings.
When applicable, except where such disclosure would reveal material non-public information:
the research analyst owns shares of the subject issuer
we or any of our affiliates own more than 1% of the issuer’s securities.
we or any of our affiliates served as a manager or co-manager of an offering of the issuers securities within the past 12 months.
we or any of our affiliates received compensation for investment banking services within the past 12 months from this issuer.
we or any of our affiliates expect to receive or intend to seek compensation for investment banking transactions from the issuer within the next three months.
we or any of our affiliates are engaged to provide investment banking services to the issuer.
the issuer is a client for non-investment banking securities services.
we or any of our affiliates have received compensation from the issuer for non-investment banking securities services within the next 12 months.
we are a market maker or liquidity provider in the issuer’s securities
an employee serves as an officer or director of the issuer
we and/or the research analyst are subject to any other material conflict of interest of which we are aware at the time of publication
We may not be required to provide and may elect not to provide, certain disclosures concerning a business relationship with an issuer, when such disclosure would reveal material non-public information regarding specific banking transactions with the subject company.
We may include other disclosures as we consider appropriate.
Last updated: October 30, 2017