Executive Summary
On December 5, 2025, the Securities and Exchange Commission (SEC) agreed to terminate—or significantly modify—the remaining undertakings under the Global Research Analyst Settlement, long ago entered into in the early 2000s, which imposed strict firewalls and prescriptive rules for research‐banking separation. [2][3] The change recognizes that many of those obligations have been superseded by FINRA Rule 2241 (adopted in 2015) and aims to reduce regulatory burden, enable more benign interactions between analysts and bankers, and thereby increase research coverage—especially for smaller companies. [1][2][3]
Analysis
The Global Research Analyst Settlement (GRAS), launched in 2003–2004 following concerns that investment banking was unduly influencing equity research, required twelve major broker‐dealers to enforce strict separation between research and banking arms, including a broad ban on direct communications. [1][2] Over time, the regulatory framework evolved: Regulation AC introduced truthfulness and disclosure requirements for analysts, and in 2015, FINRA adopted Rule 2241—a principles-based rule, applicable to all broker-dealers, targeting similar conflicts of interest. [1][3]
In late 2025, the settling firms moved to terminate their obligations under GRAS, arguing that the continuing parallel obligations from the settlement impose unnecessary cost and burden, given that Rule 2241 now addresses most of the same conflicts. [2][3] The SEC agreed, consenting to modifications—and effectively terminating the remaining undertakings—contingent on court approval. The undertakings had anticipated modification or termination once equivalent regulatory protections were in place. [3]
Key differences remain between GRAS and Rule 2241: GRAS imposes prescriptive restrictions including a blanket ban on direct communications between bankers and analysts—even for innocuous matters such as passing along logistics for calls or facilitating requested introductions. Under Rule 2241, more benign interactions are permitted so long as there are robust information barriers and policies and procedures in place. [2][3]
Strategic implications for investment banks, capital markets participants and issuers are material. Easing GRAS restrictions should lower compliance costs and friction for the large banks bound by it, allow more streamlined internal communication, and potentially restore or increase research coverage for small and mid-cap companies. Investors may enjoy better analyst access to executive managers and more timely insights. On the flip side, courts, regulators, and market participants should watch whether investor protections remain sufficient and whether implementation risks—such as lapses in conflict mitigation—materialize.
Open questions include: Which GRAS provisions will survive post-modification? How will courts view the SEC’s determination that modification is “not adverse to the public interest”? Will smaller firms benefit meaningfully from increased research coverage? And will regulatory arbitrage or lapses in investor protection arise if oversight under Rule 2241 is inadequate?
Supporting Evidence
- The settlement originally imposed strict requirements including a communications firewall between equity research and investment banking arms to prevent conflicts of interest. [2][1]
- FINRA Rule 2241 (adopted 2015) is now viewed as covering similar ground—requiring conflict mitigation via policies/procedures, information barriers, and disclosures. [1][3]
- Under GRAS, major banks could not do basic tasks such as bankers passing along public-call dial-in details, or attending analyst conference calls even “listen-only,” or facilitating introductions at client request—activities now permitted under Rule 2241. [2]
- SEC Commissioner Mark Uyeda described the change as “an important step toward eliminating outdated and costly requirements … and improving the availability of equity research.” [1]
- The change remains subject to court approval, meaning there is still legal risk before final implementation. [2][3]
- The practical impact may be limited for some firms, as much of GRAS’s obligations are mirrored in Rule 2241; but for the GRAS-bound firms, compliance overhead and rigid restrictions may ease. [2]
Sources
- [1] www.sec.gov (SEC) — Dec. 5, 2025
- [2] www.ropesgray.com (Ropes & Gray LLP) — Dec. 5, 2025
- [3] www.jdsupra.com (Mayer Brown) — Dec. 8, 2025