Title V: Analyst Conflicts Of Interest

The Title V: analyst conflicts of interest requirement under the Sarbanes-Oxley Act requires you to prevent research analysts’ work from being improperly influenced by investment banking or issuer relationships, and to support that separation with policies, oversight, and defensible records. Operationalize it by mapping analyst conflict risks, implementing firmwide controls, and retaining evidence that research was produced and distributed under independence rules (Pub. L. 107-204).

Key takeaways:

• Build a control framework that separates research from business incentives and documents decisions end-to-end (Pub. L. 107-204).
• Define clear ownership, review cadence, and sign-offs so your program operates consistently and can be tested (Pub. L. 107-204).
• Standardize evidence: disclosures, approvals, exceptions, and retention so audit and regulators can reconstruct each research event (Pub. L. 107-204).

Title V of the Sarbanes-Oxley Act addresses analyst conflicts of interest. For a Compliance Officer, CCO, or GRC lead, the practical problem is rarely “Do we have a policy?” It’s whether you can show, quickly and consistently, that research activities are insulated from incentives and relationships that could bias recommendations, and that you disclosed conflicts when required (Pub. L. 107-204).

This requirement matters most if your organization produces, distributes, or otherwise stands behind investment research, or if you have affiliated functions (like investment banking, capital markets, or issuer coverage) that can create pressure on analyst output. Even if research is not a core business line, any publication, client communication, or marketing material that resembles “research” can trigger similar governance expectations.

This page is written to help you implement the title v: analyst conflicts of interest requirement as an operator: what to scope, what controls to run, who owns them, what evidence to retain, and where audits usually get stuck. Where SOX is high-level on mechanics, you’ll translate it into controls that can be tested repeatedly and produce clear artifacts (Pub. L. 107-204; SEC SOX spotlight).

Regulatory text

Regulatory excerpt (provided): “Sarbanes-Oxley Act Title V: Analyst Conflicts Of Interest obligations.” (Pub. L. 107-204)

Operator interpretation: Title V requires governance that addresses conflicts of interest affecting research analysts. In practice, you need to (1) identify where conflicts can arise, (2) implement policies and controls to prevent improper influence, (3) require and track conflict disclosures, and (4) retain records that let an examiner or auditor reconstruct that research independence controls operated as designed (Pub. L. 107-204).

What the operator must do:

• Establish written requirements for analyst independence, conflict identification, and disclosure practices (Pub. L. 107-204).
• Put in place organizational separation and supervision controls so research content and ratings are not driven by commercial interests (Pub. L. 107-204).
• Create a repeatable evidencing approach (inputs, approvals, outputs, exceptions, and retention) to support internal audit, external audit, and regulatory review (Pub. L. 107-204; SEC SOX spotlight).

Plain-English requirement

You must run a program that prevents biased research. That means analysts and research management cannot be compensated, supervised, or pressured in ways that tie research conclusions to investment banking outcomes or issuer relationships. When conflicts exist, you must manage them and document what you did, including any disclosures that accompany research distribution (Pub. L. 107-204).

Who it applies to (entity and operational context)

This requirement is most relevant to:

• Public companies and regulated financial organizations with research functions, research distribution, or analyst-branded publications (Pub. L. 107-204).
• Firms with investment banking/capital markets activity alongside research coverage, where commercial incentives can influence analysts (Pub. L. 107-204).
• Issuer-facing organizations that publish market views, ratings, or recommendations under the firm’s name (Pub. L. 107-204).

Operationally, scope it to:

• Research production (drafting, review, approval, publishing)
• Research distribution channels (email lists, portals, sales enablement, client decks)
• Analyst personal trading and holdings monitoring (if applicable to your business model)
• Compensation and performance management touchpoints for analysts
• Supervision, escalation, and exception handling

What you actually need to do (step-by-step)

1) Define the control objectives and assign owners

Write a short set of control objectives that a tester can validate. Keep it operational.

Minimum control objectives to document:

• Research independence: research conclusions are free from undue commercial influence (Pub. L. 107-204).
• Conflict identification and disclosure: material conflicts are identified, approved where required, and disclosed with research output (Pub. L. 107-204).
• Governance and oversight: clear supervision, escalation, and periodic review of conflicts and breaches (Pub. L. 107-204).

Ownership model (practical):

• Business owner: Head of Research (day-to-day control operation)
• Second line: Compliance (policy, surveillance design, attestations)
• Assurance: Internal Audit (testing plan, sampling, validation)

Deliverable: a RACI with named roles, not departments.

2) Map conflict scenarios to concrete control points

Build a “conflict scenario library” and attach controls to each scenario. Examples:

• Issuer is also an investment banking client.
• Analyst compensation discussions reference banking revenue.
• Sales or banking requests to change rating/coverage timing.
• Analyst holds securities in covered issuers.
• Pre-publication sharing with issuers or banking.

Deliverable: a risk-and-control matrix tying each scenario to preventive/detective controls and evidence.

3) Implement separation, approvals, and surveillance in the research workflow

You need controls that operate where work happens.

Workflow controls to implement:

• Pre-publication approval gates: research manager and Compliance sign-off rules for covered events (ratings changes, initiations, sensitive issuers). Evidence should include the final draft, approval timestamps, and approver identity.
• Information barrier controls: defined restrictions on who can review drafts, who can request changes, and how exceptions are approved.
• Communications controls: monitored channels for analyst interactions with banking/sales/issuers, with escalation criteria for potential influence.
• Disclosure controls: standardized disclosure language and a mechanism to confirm disclosures were attached to distributed research.

Deliverable: a documented workflow (diagram + SOP) with embedded control steps.

4) Standardize evidence and retention (design for audit on day one)

A common failure mode is “we do the right thing, but can’t prove it.” Set evidence standards per control activity (Pub. L. 107-204).

Evidence standard template (use this for each key control):

• Inputs: draft research, conflict check outputs, personal holdings attestations (if used)
• Approvals: approver names, timestamps, decision rationale for exceptions
• Outputs: published research, distribution list/log, disclosures as delivered
• Exceptions: ticket/approval record, remediation notes, follow-up monitoring
• Retention: where stored, retention period aligned to your record retention schedule

Tip: store evidence in a system of record with immutability controls or documented change control.

5) Train, attest, and enforce

Training is only useful if it results in enforceable commitments and measurable behavior.

• Role-based training for analysts, research managers, sales, and banking interfaces.
• Periodic attestations for analysts and supervisors (conflicts, personal trading rules if relevant, communications expectations).
• A disciplinary and remediation path that is used consistently.

Deliverable: training completion logs, attestation records, and documented enforcement actions when breaches occur.

6) Track deficiencies and close them before reporting milestones

Treat analyst-conflict control breaks like other governance deficiencies: severity, owner, due date, validation before closure (Pub. L. 107-204).

• Create a centralized issues register for research independence findings.
• Require documented root cause and corrective action.
• Validate closure with evidence (not verbal confirmation).

Deliverable: issues register with closure validation artifacts.

Required evidence and artifacts to retain

Use this list as your audit-request readiness pack:

• Analyst conflicts of interest policy and procedures (Pub. L. 107-204)
• Organizational chart and supervision model for research, including separation expectations (Pub. L. 107-204)
• Research production workflow documentation (SOPs, approval matrix)
• Conflict scenario library and risk-control matrix
• Disclosure standards and approved disclosure language library
• Sampled research packages: draft, approvals, final publication, disclosures, distribution logs
• Exception logs (information barrier breaches, approval deviations, late disclosures)
• Training materials, completion logs, and attestations
• Issues register with severity grading, remediation, and closure validation (Pub. L. 107-204)
• Change control records for systems used in research publishing and approvals (where relevant to evidence integrity)

Common exam/audit questions and hangups

Expect questions framed like these:

• “Show me how you prevent investment banking influence on ratings and coverage decisions.” (Pub. L. 107-204)
• “How do you know disclosures were provided to recipients, not just drafted internally?” (Pub. L. 107-204)
• “Who can approve an exception, and how do you document rationale?” (Pub. L. 107-204)
• “How do you test that the controls operated, not just that the policy exists?” (SEC SOX spotlight)
• “What is your process when a potential conflict is identified mid-cycle?” (Pub. L. 107-204)

Where teams get stuck:

• Evidence is scattered across email, chat, and shared drives.
• Approval gates exist, but bypasses are undocumented.
• Disclosures are boilerplate without a control that confirms they were attached to the delivered artifact.

Frequent implementation mistakes (and how to avoid them)

Mistake	Why it fails	How to avoid it
Policy-only program	Auditors test operation, not intent (SEC SOX spotlight)	Build workflow controls and sampling-ready evidence
No defined ownership	Controls drift; exceptions become “nobody’s job”	Named owners, back-ups, and sign-off accountability (Pub. L. 107-204)
Disclosures managed as static text	Doesn’t prove delivery	Capture delivered outputs and distribution logs per publication
Exception handling by informal email	Hard to reconstruct decisioning	Ticketed exception workflow with rationale and approvals
Issues closed without validation	Repeat findings	Require closure evidence and second-line validation

Enforcement context and risk implications

Public enforcement cases were not provided in the source catalog for this requirement, so this page does not summarize specific cases.

Risk implications you should treat as realistic:

• Regulatory risk: perceived or actual analyst bias is a high-scrutiny conduct issue; weak controls can trigger examinations and remediation requirements (Pub. L. 107-204).
• Financial reporting and governance risk: control gaps often surface as “ineffective oversight” themes, especially where documentation and evidence are inconsistent (SEC SOX spotlight).
• Reputational risk: research integrity failures create client trust and market credibility issues.

Practical 30/60/90-day execution plan

First 30 days (stabilize and scope)

• Confirm whether your firm produces or distributes anything that is treated internally as research or externally as recommendations.
• Inventory research workflows, systems, and distribution channels.
• Assign owners and document control objectives with sign-off responsibilities (Pub. L. 107-204).
• Define evidence standards and a single system of record for approvals and exceptions (Pub. L. 107-204).

Next 60 days (implement controls and evidence)

• Build the conflict scenario library and map each scenario to controls.
• Implement approval gates and exception ticketing for defined high-risk events.
• Publish disclosure standards and integrate them into templates and publishing workflows.
• Start control operation sampling internally: pull a set of recent publications and confirm you can reconstruct draft-to-delivery with disclosures.

Next 90 days (test, remediate, and make it durable)

• Run a formal operating effectiveness check with Internal Audit-style sampling.
• Open issues in an issues register with severity, owners, and closure criteria (Pub. L. 107-204).
• Train relevant roles and collect attestations; address non-completions promptly.
• Operationalize ongoing reporting: metrics on exceptions, late disclosures, and overdue issues.

Where Daydream fits naturally: If you are struggling to keep artifacts, approvals, exceptions, and issue closure evidence consistent across teams, Daydream can centralize control objectives, assign ownership, standardize evidence checklists, and track deficiencies through validated closure so you can answer audit requests without a scramble.

Frequently Asked Questions

Do we fall under the title v: analyst conflicts of interest requirement if we don’t have an “Equity Research” department?

If you produce or distribute materials that function as investment research or recommendations, you should scope and control for analyst conflict risks. Confirm the boundary with counsel, then implement governance for the workflows and channels you do have (Pub. L. 107-204).

What’s the minimum evidence I need to keep for each research publication?

Keep the draft and final output, approval records (who/when), the disclosures as delivered, and distribution evidence that shows who received it. Add exception records when normal workflow steps were bypassed (Pub. L. 107-204).

How do we handle issuer review of factual statements without creating an independence problem?

Define a controlled fact-check process with permitted scope, required routing, and documented approvals. Retain the issuer feedback and your decisioning record so you can show the review did not become substantive influence (Pub. L. 107-204).

What should we do if a banker or salesperson asks an analyst to delay a downgrade?

Treat it as a potential influence event: require escalation, document the request, and record the analyst/research manager decision with Compliance oversight. Track it as an exception or incident based on your taxonomy and retain the evidence package (Pub. L. 107-204).

How do we make this auditable without drowning analysts in paperwork?

Embed controls into existing tools: templated disclosures, automated approval routing, and centralized retention. The goal is one repeatable “research package” record per publication, not extra emails (SEC SOX spotlight).

What does “good” look like during an audit sample?

You can pull any sampled report and produce a single file or case record showing draft history, required approvals, conflict checks, disclosures, distribution, and any exceptions with rationale. Auditors should not need to reconstruct the story from inbox searches (Pub. L. 107-204).