It is the statement that tells a reader the truth about how a piece of research was funded. The law requires it whenever someone is paid to publish material about a security. Here is exactly what one has to say, with an annotated example.
A Section 17(b) disclosure is the notice a paid publisher must include revealing that it was compensated to publish material about a security, and stating the source and the amount of that compensation. It exists so a reader can tell a paid endorsement from an independent one. A compliant disclosure conveys four things plainly: the fact of payment, the source, the amount, and the form.
Section 17(b) of the Securities Act of 1933 makes it unlawful to publish or circulate material describing a security in exchange for compensation from an issuer, underwriter, or dealer without disclosing that compensation. The disclosure is the mechanism that keeps a paid write-up from masquerading as an independent one. For the broader legal context, see is sponsored research legal.
A compliant disclosure is not a single line of vague boilerplate. To do its job it has to answer four questions clearly:
Here is an illustrative disclosure for a hypothetical engagement. It is an example to show structure, not a template to copy. Your own disclosure should be drafted or reviewed by securities counsel for your specific facts.
A disclosure works only if the reader actually sees it. That means it travels with the material itself, on the same page as the research, in a place a reader encounters rather than behind a link or buried in fine print at the bottom of an unrelated page. A disclosure that technically exists somewhere on the site but not with the report it concerns is doing very little of what the rule intends.
Most enforcement problems are not exotic. They are ordinary failures of the four elements above:
A clean 17(b) disclosure does not license everything that follows it. The federal anti-fraud provisions still apply, so even fully disclosed paid material cannot contain material misstatements or omit material risks. Disclosure tells the reader how the research was funded. It does not excuse the research from being honest. Compliant sponsored research does both: it discloses the payment, and it tells the truth about the company, including the risks. For how that distinction plays out in practice, see sponsored research versus stock promotion.
It is the statement a paid publisher must include to reveal that it was compensated to publish material describing a security, along with the source and amount of that compensation. Section 17(b) of the Securities Act of 1933 requires it so that readers can distinguish paid material from independent analysis.
Four things: the fact that the publisher was compensated, the source of the payment, the amount in dollars, and the form, meaning cash or securities, and if securities, whether they are restricted or unrestricted. The disclosure should be specific rather than vague and should appear with the material it concerns.
With the material itself, where a reader actually encounters it, rather than behind a link or buried in fine print on an unrelated page. A disclosure that exists somewhere on a site but not on the report it describes does little of what the rule intends.
No. Disclosure is necessary but not sufficient. The federal anti-fraud provisions still apply, so paid material may not contain material misstatements or omit material risks even when the compensation is fully disclosed. Compliant research discloses the payment and also tells the truth about the company.
Every Watchlist Wire report carries a full Section 17(b) disclosure on the page with the research. Read the methodology, or submit a company for a coverage eligibility review.
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