IOSCO Consults on Conflicts of Interest in Raising Equity Capital

The International Organization of Securities Commissions (IOSCO) has issued the Consultation Report, Conflicts of Interest and Associated Conduct Risks During the Equity Capital Raising Process. With this Consultation Report, IOSCO is proposing guidance to address these potential conflicts of interest and misconduct risks. The comment due date is 4 April 2018.

Conflicts of interest and related risks of misconduct can arise as a result of the role of intermediaries during the process of raising equity capital. The Consultation Paper notes that these issues can threaten the integrity and efficiency of equity capital raising, damage investor confidence, and undermine capital markets as an effective vehicle for issuers to raise funding. IOSCO has developed the proposals in the Consultation Report to help regulators identify and address these issues.

The Consultation Report identifies key stages of the equity raising process where the role of intermediaries might give rise to conflicts of interest and proposes guidance for dealing with these issues. The guidance comprises eight measures grouped according to the various stages in the capital raising process. Each group of measures addresses conflicts of interest with respect to the following specific issues:

  • Pressure on analysts during the pre-offering phase of a capital raising
  • Allocation of securities
  • The pricing of securities offerings
  • Conduct risks stemming from personal transactions by staff employed within firms managing a securities offering.

The Consultation Report is available here.

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