Magazine article Editor & Publisher

SEC Taking Close Look at Its Regs

Magazine article Editor & Publisher

SEC Taking Close Look at Its Regs

Article excerpt

WHISPERS HEARD ABOUT 'FAIR DISCLOSURE'

Availability of financial info at issue

It's an unsavory but all-too-common practice: A company divulges information to a narrow circle of stock analysts who use the knowledge for profit, with the public left out in the cold.

Federal officials want it to stop. But some journalists fear a regulatory bid to stanch insider whispering could end the give-and-take of daily business reporting -- or, perversely, give companies new opportunities to hide information in plain sight amid the millions of pages available on the Web.

The discussion points up the increased sensitivity surrounding information in an era of high-volume, hair-trigger stock trading. Investing, a game once played mainly in brokerage houses, now involves millions of citizens who closely follow business -- and who move markets when news surfaces.

In such an environment, so-called selective disclosure has become a target of federal ire. Securities and Exchange Commission (SEC) Chairman Arthur Levitt called the practice "a stain on our markets."

As a remedy, the SEC has proposed its Regulation FD, for fair disclosure. The regulation -- which still must be finalized -- says once companies tell somebody something, they must tell everybody. For instance, a warning that earnings might fall short could not be uttered solely in a conference call to a few analysts, but must be spread as widely as possible.

Some fear the rule could end up limiting information. …

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