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On December 5, 2025, the Securities and Exchange Commission (the “SEC”) agreed to modify certain long-standing restrictions placed on major investment banks as part of a court settlement (commonly referred to as the “global research settlement”) in the early 2000s. The restrictions, which were designed to address alleged conflicts of interest between the firms’ equity research and investment banking arms, included a communications firewall between the two arms.

The SEC’s action was in response to motions filed by several of the major banks party to the global research settlement requesting that they be released from certain of the restrictions under the global research settlement. In their motions, the banks argued that those restrictions were no longer necessary because comprehensive, industry wide regulation—principally Rule 2241 of the rules of the Financial Industry Regulatory Authority, which was adopted in 2015—now addresses the very conflicts of interest those restrictions were designed to manage, noting that the global research settlement itself anticipated this outcome by presuming modification once such rules were adopted. The banks further argued that, after a decade of effective enforcement of FINRA Rule 2241, maintaining a parallel, settlement specific regime for only the banks party to the global research settlement creates a fractured framework that imposes unnecessary burdens and costs without corresponding investor protection benefits.

The global research settlement imposes several prescriptive restrictions that FINRA Rule 2241 does not, most notably a blanket ban on direct communications between investment bankers and research analysts except for narrowly enumerated exceptions. For example, the banks noted that the following actions, which would not pose any relevant conflict of interest under FINRA Rule 2241, are barred under the global research settlement: (1) bankers asking analysts for purely ministerial information (such as dial in details for a public research call); (2) bankers passively (i.e., in “listen only” mode) attending a research analyst call with company management; and (3) bankers facilitating or even alerting an analyst to an investor’s or corporate client’s request for an introduction or discussion. The banks further noted that while the global research settlement mandates communication rules that often require legal/compliance chaperoning, FINRA Rule 2241 uses a principles based “information barriers and policies/procedures” approach that allows benign interactions so long as conflicts are effectively managed.

In a statement hailing the SEC’s consent to the modification, SEC Commissioner Mark Uyeda noted that “the [SEC] took an important step toward eliminating outdated and costly requirements on firms and improving the availability of equity research in our markets by agreement to amend the [global research settlement].”

The proposed modifications remain subject to court approval.