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U.S. Securities and Exchange Commission

Selective Disclosure, Regulation FD

Former SEC Chairman Arthur Levitt has spoken out about the issue of companies disclosing important information to analysts and institutional investors before releasing it to the public.

In his speech, A Question of Integrity: Promoting Investor Confidence by Fighting Insider Trading, given on February 27, 1998, former Chairman Levitt made two observations to lawyers:

First, . . . issuers should not selectively disclose information to certain influential analysts, in order to curry favor with them and reap a tangible benefit, such as a positive press spin.

Second, you should counsel your clients that – during the window of time in which only some analysts have been told material information – the news has not yet been publicly disseminated. No one who knows that information should be trading.

On August 15, 2000, the SEC adopted a rule on selctive disclosure, Regulation FD.

On October 19, 2000, the SEC's Division of Corporation Finance issued a series of "telephone interpretations" that provide informal guidance on how companies can comply with Regulation FD.