Does Regulation AC prohibit firms from compensating analysts for being good stock pickers?
No. As noted in the Adopting Release, Regulation AC is not intended to address or prohibit performance-based compensation, or otherwise prescribe how analysts may be compensated. Regulation AC requires that a research report contain a statement by the research analyst certifying whether his or her compensation was, is, or will be related to the specific recommendations or views expressed by the research analyst in the research report. If all or part of his or her compensation is related to such recommendations or views, the statement must also include the source, amount, and purpose of such compensation and further disclose that it may influence the recommendations or views expressed. Question 17: If an analyst is out of the office and relays (by telephone, facsimile, or e-mail) to an assistant information to be included in a research report, can the analyst also dictate his certifications to the assistant? Answer: Yes. However, the broker-dealer or covered person should have a contemp
