SEC Moves to End Global Research Analyst Settlement—FINRA Rule 2241 Takes Center Stage

Gist

The SEC moved to terminate the remaining obligations under the 2003–04 Global Research Analyst Settlement, subject to court approval.
The settlement’s strict, prescriptive controls on research–banking conflicts have largely been superseded by FINRA’s more principles-based Rule 2241.
Ending these undertakings is expected to cut compliance costs, reduce competitive disadvantages for smaller and mid-sized firms, and harmonize regulatory requirements across broker-dealers.
Regulators and market participants still debate whether Rule 2241 adequately preserves the conflict-of-interest protections once ensured by the settlement’s stricter mandates.

The Global Research Analyst Settlement was first established in 2003-2004 in response to serious conflicts of interest wherein research analysts were allegedly influenced by investment banking pressure in major firms. The settlement imposed prescriptive mandates: physical separation of research and investment banking, strict communication firewalls, analyst compensation divorced from banking revenues, mandatory disclosure, and independent research funding. [2][4]

Since then, the regulatory landscape has changed substantially. In particular, FINRA’s Rule 2241 (adopted in 2015) introduced a formal framework applicable industry-wide to manage conflicts of interest in research, with principles-based requirements around disclosure, supervision, and information barriers rather than fixed, prescriptive restraints. [1][6]

On December 5, 2025, the SEC formally consented to amendments terminating the remaining undertakings in the GRAS, for certain firms still bound by it, recognizing that many of its provisions are now redundant given Rule 2241 and other regulatory developments. The modification process is subject to court approval. [1][3]

Strategic implications include:

For investment banks: relief from onerous compliance costs and burdens—especially for mid-sized firms still bound by GRAS, which have contended that GRAS imposes competitive disadvantages. [6][10]
For investors and issuers: potential for broader and more diverse research coverage, particularly of smaller and emerging companies, since compliance friction has been identified as a limiting factor for analysts covering such names. [1][6]
Regulatory consistency: A move toward harmonizing requirements across all broker-dealers, reducing dual-track obligations where some firms operate under GRAS and others under more recent rules like Rule 2241. [6][9]
Questions of enforcement and investor protection: Whether Rule 2241 in practice provides as strong conflict mitigation, especially around communication and compensation, as GRAS did; whether court approval might modify the termination; whether non-settling firms interpret or apply Rule 2241 differently. [6][3]

Supporting Notes

The SEC’s December 5, 2025 litigation release states that settling firms filed motions in mid-2025 to terminate the remaining undertakings under GRAS, citing FINRA Rule 2241 adoption and implementation. [1]
The 2003-04 Settlement required such firms to maintain strict walls between research analysts and investment banking, including bans on participation in pitches or roadshows, compensation based on banking revenues, and full disclosure of analysts’ public ratings and forecasts. [4][2]
Rule 2241, adopted by FINRA in 2015 and SEC approved, provides a principles-based framework covering many of the same areas GRAS addressed: conflicts of interest disclosures, analyst supervision and compensation, information barriers, etc. [1][6]
Commissioner Mark T. Uyeda stated that the GRAS provisions “no longer hold their relevance,” and that terminating them will “lower compliance friction, promote more consistent interpretations, and, ultimately, expand the availability of research coverage.” [1]
Piper Sandler and Stifel Financial—successors to two of the smallest GRAS firms—earlier in 2025 petitioned for release from the consent decrees, arguing GRAS restrictions are now outdated and create competitive disadvantages. [10][6]
A law firm commentary (Ropes & Gray) notes that GRAS imposes blanket bans on certain communications between research and banking units—bans which Rule 2241 allows in some benign or managed circumstances. [6]

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