Glossary term
Regulation AC (Analyst Certification)
Regulation AC is an SEC rule requiring research analysts to certify views and compensation-related disclosures in research reports and public appearances.
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What Is Regulation AC?
Regulation AC, short for Regulation Analyst Certification, is an SEC rule that requires research analysts to certify that the views in a research report accurately reflect their personal views. It also requires certifications or disclosures related to whether the analyst's compensation was tied to the specific recommendations or views expressed.
The rule was adopted to strengthen accountability in securities research. It addresses a practical investor concern: research can influence trading decisions, so readers should know whether the analyst stands behind the stated view and whether compensation conflicts are being disclosed.
Key Takeaways
- Regulation AC applies to research analyst certifications in certain research reports and public appearances.
- Analysts must certify that stated views accurately reflect their personal views.
- Reports must address whether analyst compensation was related to the specific recommendation or view.
- The rule supports transparency, but it does not guarantee that a recommendation will be correct.
What the Certification Addresses
Certification Area | Investor Use |
|---|---|
Personal view | Confirms the analyst stands behind the stated research view. |
Recommendation | Connects the certification to the analysis or rating in the report. |
Compensation link | Discloses whether pay was tied to specific views or recommendations. |
Public appearance | Addresses analyst views expressed outside written research. |
Broker-dealer disclosure | Helps readers identify when required certifications are missing or qualified. |
Research Conflicts and Investor Reading
Regulation AC is part of a broader framework around research analyst conflicts. Analysts may work at firms with investment banking relationships, trading businesses, issuer access, or other incentives that could influence how research is produced or perceived.
The certification does not make a report independent by itself. It gives readers a specific disclosure point to check alongside ratings definitions, price targets, conflicts, valuation assumptions, and the firm's business relationships.
What It Does Not Do
Regulation AC does not tell investors whether to buy or sell a security. It does not prove a forecast is reliable, remove all conflicts, or guarantee that a price target is achievable. It is a disclosure and accountability rule.
Investors should still ask what assumptions drive the recommendation, how the analyst is defining the time horizon, and whether the research fits their own risk and portfolio context.
The Bottom Line
Regulation AC requires analyst certifications that make securities research more accountable and transparent. It helps readers evaluate research conflicts, but it should be used as one part of a broader review of the report's assumptions and incentives.