Series 79 practice questionmediumDue Diligence Defense
A research analyst participates in due diligence meetings for a follow-on offering. What is the main regulatory risk if the analyst’s report is published during the offering's quiet period?
- AAnalyst is permitted unrestricted publication
- BIt may be considered illegal gun-jumping, violating research quiet period rules
- CSuch publication is allowed if the report is favorable
- DThe firm faces potential liability for violating research and offering restrictions✓ Correct answer
Explanation
Why D — The firm faces potential liability for violating research and offering restrictions
Publishing research during the quiet period can expose the firm to liability for violating SEC and FINRA regulations. The trap is assuming a favorable or factual report is exempt, but timing restrictions apply regardless of content.
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