A Refresher on Regulation FD and the SEC's Policing of Selective Disclosures

Regulation FD (Fair Disclosure) is designed to precludeselective disclosures of material nonpublic information.In its release adopting Regulation FD, the Securitiesand Exchange Commission noted that those receivingmaterial nonpublic information before thegeneral public are ‘‘able to make a profit or avoid a lossat the expense of those kept in the dark.’’ Accordingly,Regulation FD provides that ‘‘[w]henever an issuer, orany person acting on its behalf, discloses any materialnonpublic information regarding that issuer or its securitiesto [certain enumerated persons], the issuer shallmake public disclosure of that information . . . (1)[s]imultaneously, in the case of an intentional disclosure;and (2) [p]romptly, in the case of a nonintentionaldisclosure.’’

While there is no private right of action for violationsof Regulation FD, the SEC has brought actions to enforcethe Regulation. Relatively few such enforcementactions have been brought; nevertheless, Regulation FDhas significantly altered the way issuers communicatewith financial analysts, institutional investors, andshareholders. The article outlines the basic provisionsof Regulation FD and discusses recurring themes in theCommission’s enforcement actions.

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