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    IOSCO Guidance to Address Misconduct Risk in Equity Capital Raising

    September 18, 2018

    IOSCO published the final report that sets out guidance to help its members address conflicts of interest and associated misconduct risks that may arise and undermine the equity capital raising process. The guidance is intended to help regulators identify and address these risks.

    The report details the key stages of equity capital raising where the role of intermediaries might give rise to conflicts of interest that compromise the integrity and efficiency of the process. The guidance sets standards of conduct for market intermediaries in the equity capital raising process and it comprises eight measures that address the following:

    • Conflicts of interest and pressure on analysts during the formation of their views on an issuer in the pre-offering phase of a capital raising
    • Conflicts of interest during the allocation of securities
    • Conflicts of interest and conduct risks in the pricing of securities offerings
    • Conflicts of interest and conduct risks stemming from personal transactions by staff employed within firms managing a securities offering

    This report is the first stage of the work of IOSCO to examine the conflicts of interest and associated conduct risks in the capital raising process. The second phase will consider the conflicts of interest and associated conduct risks during the debt capital raising process. It is believed that conflicts of interest and associated conduct risks stemming from the role of intermediaries can harm the integrity and efficiency of the equity capital raising process, damage investor confidence, and weaken capital markets as an effective vehicle for issuers to raise funding.

     

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    Keywords: International, Banking, Securities, Guidance, Misconduct Risk, Conflicts of Interest, Equity Capital Raising Process, IOSCO

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