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Regulation Analyst Certification

April 30, 2003

MEMORANDUM

To:   Our Clients and Friends
From:   Olshan Grundman Frome Rosenzweig & Wolosky LLP
Date:   April 30, 2003
Re:   Regulation Analyst Certification

On February 20, 2003, the SEC adopted Regulation AC, implementing Section 501 of the Act.  Regulation AC requires brokers, dealers and certain associated persons to include in research reports certifications by the research analyst (1) that the views expressed in the report accurately reflect his or her personal views about the subject securities and issuers; and (2) whether or not the analyst received compensation or other payments in connection with his or her specific recommendations or views.  If the certification is to the effect that the analyst did receive such compensation or payments, it must include information as to the source, amount and purpose of such compensation or payments, and a disclosure that they may influence the recommendations in the report.  A research report is defined as a written communication (including an electronic communication) that contains an analysis of a security or an issuer and provides information reasonably sufficient upon which to base an important decision. 

Regulation AC requires brokers, dealers and certain associated persons who publish, circulate or provide a research report prepared by a research analyst employed by the broker, dealer or associated person to establish a record containing a statement by the research analyst that (1) all views made by the analyst in all public appearances during the quarter accurately reflect the analyst's personal views; and (2) no part of the analyst's compensation relates to the specific recommendations or views expressed by the research analyst in such public appearances.  This record must be established within 30 days after any calendar quarter in which the research analyst made a public appearance.

Regulation AC does not apply to a publisher of any bona fide newspaper, news magazine or business or financial publication of general or regular circulation that is not registered or required to be registered with the SEC as a broker, dealer or investment advisor.  In addition, a research report distributed by a broker-dealer, but prepared by a third-party research analyst whose employer satisfies certain independence criteria, need not contain the Regulation AC certification.

Notwithstanding these required certifications, Regulation AC does not impose substantive requirements on broker-dealers regarding the contents of their research reports or the compensation of their research analysts.  Regulation AC took effect on April 14, 2003.  For more information see SEC Release No. 33-8193 located at http://www.sec.gov/rules/final/33-8193.htm.

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These are only brief descriptions of the SEC's new rules.  This memorandum provides general information only and does not constitute legal advice that may be applied to any particular situation.  Please contact the Partners in our Corporate Department for further advice and assistance.

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