IOSCO proposes guidance on conflicts of interest in capital raising

By Lene Powell, J.D.To address conflicts of interest and associated conduct risks in the equity capital raising process, IOSCO has proposed guidance to help regulators evaluate market practices in their respective jurisdictions and take specific measures to mitigate risks. The guidance focuses on three areas of risk: (1) the role of connected analysts in the capital raising process; (2) the prominent role that connected research plays in investor education and price formation; and (3) allocations of securities. The guidance recommends eight measures for regulators to take.Public comments on the consultation are due April 4, 2018.Risks and need for guidance. IOSCO previously issued guidance in 2003 and 2007 on conflicts of interest in the capital raising process. To update and supplement the previous guidance, IOSCO assessed current conflicts of interest and related conduct risks. The committee found three key risks:conflicts of interest and pressures on “connected…

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