Dow Jones Urges SEC Against Disclosure Rule

Dow Jones & Co. has told the Securities and Exchange Commission that a proposal to stop selective disclosure of company news could dry up scoops at its flagship Wall Street Journal newspaper.

The rule would require companies to make potential market- moving news available to all, and aims to stop a common practice in which some companies have private briefings for select brokerage analysts and big investors.

The proposal has generated unusual interest, with more than 3,500 comments to the SEC, including many from individual investors who say big institutions shouldn’t have an unfair advantage.

Dow Jones warned that the SEC rule could hurt the flow of information by discouraging companies from giving exclusive interviews or news to financial journalists for fear of selective-disclosure sanctions. If that happens, the impact would be felt at the Journal, the biggest U.S. financial newspaper, which often breaks news of mergers and other developments.

“There is a long tradition that people who are going to announce a [merger] deal will give Dow Jones a heads up a week before,” said John Olson, a lawyer at the Gibson, Dunn & Crutcher firm who represents Dow Jones before the SEC. “The [Dow Jones] reporters who were first concerned about this were those who covered M&A; [merger and acquisition] activity.”

The agency’s proposed “Regulation FD”--for fair disclosure--has been championed by SEC Chairman Arthur Levitt, who has pressed for greater openness and has called selective disclosure a “stain upon our market.”

But Dow Jones urged the SEC to specify that Regulation FD would be “inapplicable to disclosures to bona fide news organizations.”

Otherwise, companies might be put in the position of being required to issue news releases every time they provide nonpublic information to an individual reporter, Dow Jones said.