SEC’s Fair Disclosure Rule to Be Put in Effect

Securities and Exchange Commission rules, under the title Regulation FD (for fair disclosure), are scheduled to go into effect today, requiring companies to make public within 24 hours any information unintentionally disclosed by a company to select analysts or investors. Critics of selective disclosure, including SEC Chairman Arthur Levitt, say it unfairly gave a privileged few access to company information--and the opportunity to trade on it--that is denied to others. The new rules are designed to eliminate the advantage that bigger investors sometimes have over individuals. When publicly traded companies need to release important information that could affect their stock price, such as earnings reports and acquisitions, they generally disseminate that information to the financial media through a news wire such as Business Wire and its main competitor PR Newswire. Officials at Business Wire and PR Newswire said they expect the number of news releases distributed over their services to increase, at least for a while, as executives get used to the new rules. But none of the major financial news wires expect dramatic changes in how companies disseminate important information.