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U.S. Securities and Exchange Commission

Comments on Proposed Rule:
Selective Disclosure and Insider Trading

Release Nos. 33-7787, 34-42259, IC-24209, File No. S7-31-99


Author: Kevin Autrey at Internet Date: 04/26/2000 11:34 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I am against "selective disclosure" and FOR this proposed regulation. Regards, Kevin Autrey


Author: Judy Wong at Internet Date: 04/26/2000 10:02 AM Normal TO: RULE-COMMENTS at 03SEC Subject: File No. S7-31-99 ------------------------------- Message Contents April 26, 2000 Jonathan G. Katz, Secretary Securities and Exchange Commission 450 5th Street, N.W. Washington, D.C. 20549 RE: Proposed Regulation FD, File No. S7-31-99 Dear Mr. Katz: On October 18, 1999, Chairman Arthur Levitt addressed the Economics Club of New York and commented on an issue I believe is likely to have a profound impact on our capital markets in the new millennium. Mr. Levitt remarked that: "Quality information is the lifeblood of strong, vibrant markets. Without it, investor confidence erodes. Liquidity dries up. Fair and efficient markets simply cease to exist." "As the quantity of information increases exponentially through the Internet and other technologies, the quality of that information must be our single priority." Mr. Levitt's comments demonstrate a genuine concern about the "quality" of information affecting our capital markets. However, the Commission has failed to implement regulations designed to stop a growing problem that directly relates to the "quality" of such information. That problem is the anonymous communication of inaccurate, deceptive or misleading statements on the Internet regarding public companies. The Commission devotes much attention to the quality of communications when the source is identifiable, but has not sought to control anonymous tipsters and commentators who publish with no concern for accountability. With the advent of the Internet, the sponsorship of stock information services and related message boards, a completely non-regulated environment has been established which exists in tandem with market-related information. The proliferation of the Internet has dramatically increased the volume of "information" available at the fingertips of investors, yet the quality of such information has gone largely unchecked. The anonymous nature of the Internet has lent itself to the creation of an environment ripe for deceptive, misleading and manipulative practices by anyone with a computer keyboard. Therefore, the Commission should expand proposed Regulation FD to prohibit anonymous Internet communications regarding public companies, and require the persons responsible for such stock-related communications to identify themselves. Such a proposal would tend to aid the "quality" of information available in our capital markets and decrease market volatility. Background - Rationale The process of investing in our capital markets today is far different from that of ten years ago. Today's investors have access to instantaneous trading information and trading capabilities due to technological advances in communications and the Internet. In comparison, investing ten years ago was time consuming and costly. The proliferating use of the Internet has benefited our capital markets in many ways, but there have also been undesirable consequences. For example, today's instantaneous markets have become increasingly volatile. In 1991, the Dow Jones Industrial Average fluctuated by 2% from its previous day's close on only about 8% of the trading days. However, through April 17th of 2000, the Dow achieved 2% fluctuations on over 20% of its trading days. The technology heavy Nasdaq, moreover, has observed such 2% fluctuations on well over 50% of its trading days in 2000. While many factors have contributed to the increasing volatility of today's instantaneous capital markets, one such factor has received increased publicity in recent years - the anonymous communication of inaccurate, deceptive or misleading statements on Internet sites. The dramatic effect such practices can have on a public company's stock price in today's capital markets can be seen through the following examples: In February 2000, eConnect's common stock traded at about $1.40. The stock price soared to about $22 in early March 2000. The dramatic increases were caused by a stockholder who posed as a financial analyst, issued fake press releases, and pumped the company stock on the Internet. The stockholder dumped his stock when the price rose, and profited $1.4 million. Between April 1998 and October 1999, Callaway Golf Co.'s common stock price fell from $27 to $12. During that time, an anonymous competitor holding short positions in the company posted disparaging messages on an investment message board on the Internet. In August 1998, Labor Ready, Inc.'s market capitalization lost $285 million in 90 minutes due to anonymous Internet rumors. The dramatic volatility was due to false Internet chat room comments that the company used illegal immigrants and was not properly accounting for taxes. As a result of the rumors, the Company's stock price dropped from $30.88 to $20.63. In December 1995, Iomega's stock price dropped $7 within hours after an anonymous message appeared on an investment message board on the Internet. The anonymous messenger claimed to have inside information that quarterly earnings estimates would be revised downward by 50%. These examples are only a sample of cases which have received public notoriety. They graphically demonstrate how susceptible public markets and public stocks are to false and misleading information, which is aided in dissemination by anonymity. Everyday, so-called message boards are filled with anonymous postings. This impacts public perception of the markets in general and the Commission's reputation as an effective regulator of market activity. The increased volatility in our capital markets can be linked, in part, to the "quality" of information reaching investors, as shown in the above examples. Therefore, the Commission should expand the scope of proposed Regulation FD to ensure the "quality" of information in our capital markets by prohibiting anonymous Internet communications regarding public companies, and requiring the persons responsible for such stock-related communications to identify themselves. Current Commission Regulation In July 1998, in an effort to address a new threat to market integrity and volatility, the Commission established the Office of Internet Enforcement. Its first major action occurred in October 1998 when it brought 23 separate cases against 44 individuals and companies who were acting as stock promoters or touters using the Internet to promote small stocks in exchange for undisclosed payments in violation of securities laws. Additional cases were brought in February 1999 in a scheme that is referred to as "pump and dump" involving false positive information which causes investors to purchase, thus increasing the price and permitting the promoters to sell their own shares profitably. More recently, on February 25, 2000, securities fraud charges were brought against James Sheret, Jr., and Glen Conley in connection with a nationwide Internet-based scheme involving about 60 companies. Sheret and Conley were charged with operating a fraud from November 1999 until February 2000 in which they made approximately $1.13 million in illegal profits. The two men allegedly sent hundreds of thousands of e-mails, touting the investment prospects of thinly-traded, largely dormant micro-cap companies whose stock they had purchased. They then disguised the e-mails to make them appear as if they had been sent by Internet service giant America Online. The criminal complaint alleged that the men fraudulently opened e-mail accounts through 23 Internet service providers across the country and used false information to conceal their identity. These cases indicate that the Commission is willing to diligently investigate and prosecute deceptive or misleading activities on the Internet to ensure the high-speed flow of "quality" information to investors and protect investors from market volatility. An affirmative requirement to identify the communicator would be a reasonable step to help thwart such reckless communication, thereby lessening the cost of investigation and prosecution. Full Disclosure Proposal The Commission should further its efforts of ensuring the flow of "quality" information and limiting market place volatility. Therefore, the Commission should expand the scope of proposed Regulation FD to include the following provision: "Any person transmitting a statement to a publicly accessible Internet site with respect to a company registered under the Securities Exchange Act of 1934 must be identified by that person's actual name." The requirement that persons identify themselves when communicating on the Internet regarding the stock of publicly traded companies has strong merit. Anonymous statements on the Internet regarding the stock of publicly traded companies are a potent means for manipulating the market and committing securities fraud. They should be stopped. Simple disclosure of the source is the answer. Compliance with Constitutional Standards Prohibiting anonymous communications in favor of identifiable communications on the Internet with respect to securities of publicly traded companies is consistent with the treatment of material sent over fax machines and disclosed by telemarketers. Fax machines are in many ways analogous to e-mail and Internet communications, and federal law has recognized the dangers presented by anonymous communications by fax machines. Accordingly, federal law requires persons to disclose their identity when sending a fax. The relevant statute (47 U.S.C. 227(d)(1)(B)), provides that it is unlawful for any person in the United States: "To use a computer or other electronic device to send any message via telephone facsimile machine unless such person clearly marks, in a margin at the top or bottom of each transmitted page of the message or on the first page of the transmission, the date and time it is sent and an identification of the business, other entity, or individual sending the message and the telephone number of the sending machine or of such business, other entity, or individual." This statute not only applies to communications sent by fax machines, it also applies to communications sent from a computer to a fax machine. Sending messages from computer to computer poses the same types of anonymous communication dangers as sending a message from a computer to a fax machine, or from a fax machine to a fax machine. Requiring persons to identify themselves only when transmitting statements concerning public companies to public Internet sites is much more limited than the requirement, already part of federal law as quoted above, that the sender of all facsimiles be identified. Federal regulations also prohibit telemarketers from placing telephone calls without first identifying themselves. The relevant regulation (16 C.F.R. 310.4(d)(l)), provides that: "It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer in an outbound telephone call to fail to disclose promptly and in a clear and conspicuous manner to the person receiving the call ... the identity of the seller." This telemarketer regulation is similar to the proposed regulation of anonymous Internet communications regarding public companies in two respects. First, both regulate anonymous commercial speech. Second, both are attempts to stop deceptive, misleading and manipulative practices. The full disclosure proposal also complies with First Amendment standards based on Supreme Court guidance obtained from Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 612 (1976). In Buckley, the Supreme Court held that the First Amendment does protect certain rights to make political contributions and expenditures, but that it does not violate the First Amendment to require persons contributing more than a certain amount of money to political campaigns to provide his or her real name. The Court stated (424 U.S. at 66-68) that the requirement was justified by three policies: "First, disclosure provides the electorate with information 'as to where political campaign money comes from and how it is spent by the candidate' in order to aid the voters in evaluating those who seek federal office." "Second, disclosure requirements deter actual corruption and avoid the appearance of corruption by exposing large contributions and expenditures to the light of publicity . And, as we recognized in Burroughs v. United States, 290 U.S., at 548, 54 S. Ct., at 291, Congress could reasonably conclude that full disclosure during an election campaign tends 'to prevent the corrupt use of money to affect elections.' In enacting these requirements it may have been mindful of Mr. Justice Brandeis' advice: 'Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.'" "Third, and not least significant, recordkeeping, reporting, and disclosure requirements are an essential means of gathering the data necessary to detect violations of the contribution limitations described above." All three of the policy considerations that caused the Court to uphold the disclosure requirements in Buckley apply with equal force to a requirement that persons communicating statements on Internet sites regarding publicly traded companies disclose their names. First, disclosing the names will help readers evaluate the comments, and the sender's potential motives. Knowing a persons' name will help readers evaluate whether the sender has a motive in trying to make the stock move in one direction or another, and will help readers evaluate any sender's claim to be employed by a company. Second, disclosing the names will help prevent corruption of the financial system by eliminating anonymity as an important means for manipulating the market and committing securities fraud. Finally, disclosure will help to detect violations of the securities laws. This factor is particularly important given the speed with which the market moves now, and the difficulties in tracing down and identifying violators after the fact. Both the Commission and private parties have limited resources to devote to identifying anonymous Internet communications. Engaging in after-the-fact searches is not a feasible option. Just as in Buckley, requiring identification up-front is the only viable way to deal with the problem. It is also a simple way to deal with the problem. The proposed full disclosure requirement, which only pertains to speech regarding public companies, is consistent with McIntyre v. Ohio Elections Comm'n, 514 U.S. 334, 115 S. Ct. 1511 (1995) (holding that a statute that prohibited the distribution of anonymous political speech violated the First Amendment) and ACLU of Georgia v. Miller, 977 F. Supp. 1228 (N.D. Ga 1997) (holding that a statute making it a crime to transmit e-mail or similar communications that falsely identified the person or organization sending it was overbroad and violated the First Amendment). The statute in McIntyre specifically regulated political speech, while the statute in Miller was so overbroad that it encompassed political speech. The suggested proposal regulates commercial speech -- more specifically, commercial speech regarding publicly traded companies. According to the Supreme Court's holding in Central Hudson Gas v. Public Service Commission, 447 U.S. 557, 563 (1980), commercial speech is entitled to less protection under the Constitution than that afforded political speech. Conclusion As technological advances continue to affect our capital markets in ways never imagined just ten years ago, the Commission must continue to protect investors by providing full disclosure with respect to communications concerning public companies on the Internet. Anonymous Internet communications will erode the "quality" of information available to investors and increase market volatility. Therefore, the Commission should expand the scope of proposed Regulation FD to prohibit the communication of anonymous statements regarding public companies on publicly accessible Internet sites. Sincerely, Terence P. Boyle


Author: "bruce brantley" at Internet Date: 04/26/2000 11:52 AM Normal TO: RULE-COMMENTS at 03SEC Subject: proposed regulation FD: file# S7-31-99 ------------------------------- Message Contents To whom it may concern: The advantages that the big brokerage houses have over the small investor are so huge already that I am curious why the above noted regulation is even open for debate. Please do what is right and help the small individual investor. Knowledge is power and anything that empowers the little guy can't be bad. Help people learn to help themselves. Thanks for your consideration, Bruce K. Brantley


Author: at Internet Date: 04/26/2000 11:49 AM Normal TO: RULE-COMMENTS at 03SEC Subject: PROPOSED REGULATION FD: FILE NO. S7-31-99 ------------------------------- Message Contents What is the difference between an investor and a Wall Street analysis? Really, there is none. Both have the same ultimate goal. That goal is to make as much money as possible. However, the analysis probably has a higher stake in the market than does the average investor, but the goal is the same. Therefore, let's play fair. Why should the analysis be given important information prior to that information being given out to the average investor? This action is just not right. The information needs to be announced simultaneously. That is the only fair way, and I am glad to see that the SEC has finally acknowledged this fact. James Cain average trader


Author: "Walter Carpus" at Internet Date: 04/26/2000 11:22 AM Normal TO: RULE-COMMENTS at 03SEC Subject: "Proposed Regulation FD File No. S7-31-99" ------------------------------- Message Contents Gentlemen, please consider what is good for the goose is good for the gander! Should ANYONE be allowed, in a democratic society, more information than any other? I think not. You, and you alone will continue to make the decisions that are good for "ALL" the people and not just a select few. Your country depends on you for intelligent guidence! Thank You


Author: at Internet Date: 04/26/2000 1:04 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents It is in my and every other investors best interest. -D. Luke Castlen


Author: "J. Harold Chapman" at Internet Date: 04/26/2000 1:07 PM Normal TO: RULE-COMMENTS at 03SEC Subject: "Proposed Regulation FD: File No. S7-31-99" ------------------------------- Message Contents By all means, J. Harold Chapman 121 Kaywood Dr. Sanford, FL 32771


Author: at Internet Date: 04/26/2000 12:00 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Help Stop Selective Disclosure Att. Dave Cortes Small investor in Ameritrade, Pall Corp, E-trade, Audible Inc.


Author: "Everitt; William" at Internet Date: 04/26/2000 12:51 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I've been following the debate at the Motley Fool website in regards to allowing individual investors access to information which is currently privileged to Wall Street only. I am in favor of the rule allowing such access. As in individual investor, I deserve that information just as much as the next person or brokerage. If Wall Street feels the general public is not smart enough to comprehend the facts, then they have nothing to worry about. It's important to the future of individual investing to have a level playing field with Wall Street. Sincerely, William Everitt Individual Investor


Author: "Kenton Flaig" at Internet Date: 04/26/2000 6:35 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Dear Sirs: I had to laugh while reading the SIA's comments on this, the reply that basically says that individual investors are too stupid to know what to do with the information and thus need to be protected from themselves. Ya, right. The SIA wants to protect us. How come I just have this feeling that the SIA just wants to get first jump on the news so that they can get in or get out of a stock sooner than the little guy? And, while I was laughing at the nerve of the SIA trying to put the "we just want to protect the little guy" spin on their reply I am not laughing at the thought that you, the SEC, just might wimp out and let them get away with it. Your decision on regulation changes like this, which attempt to make the process fair, will show your true colors. Kenton Flaig 1013 Ironwood Dr. Las Vegas, NV 89108 702 648-0931 603 794-6469 fax


Author: "Evelyn M. Foster" at Internet Date: 04/26/2000 9:57 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I just read a summary of the comments by the SIA about not disclosing company information to the public, but only a select group of analysts. I'm appalled! I am an individual investor and my livelihood is based on my investing. Why should I continue to play this game when I do not have the playbook. After reading the SIA's comments I felt like I was in a football game where only the quarterback and the head defensive player know the rules. The rest of us have to perform equally well, but without knowing the plays. This is craziness. If I can as an investor withstand a 500 point drop in the market and still maintain a level head about reading market indicators and general economic trends then you can be sure I can handle important information about individual companies. I find that most analysts have individual agendas and they are not the bearers of impartial information. Why should they get privileged information and summarize it to their advantage versus my making my own decision about the data. As an investor, I need and want full information regardless of what it is so that my investments are based on full disclosure. Let's stop the lawsuits by shareholders and give investors a level playing field. Thank you for your attention. Evelyn Foster


Author: Robert Furnback at Internet Date: 04/26/2000 7:44 AM Normal TO: RULE-COMMENTS at 03SEC Subject: proposed Regulation FD:S7-31-99 ------------------------------- Message Contents Proposed Regulation FD:File No S7-31-99 should not be inacted because it will increase the possibilities for insider trading and make regulation harder. If only a few people are informed of all of the facts regarding an equity position only they will be able to make econimic choices and profits. We need more not less information from the leaders of bussiness. The direction I hope you will lead use in is towards more open markets with more knowledgeable investors.


Author: at Internet Date: 04/26/2000 11:49 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Regulation FD: File No. s7-31-99 ------------------------------- Message Contents Jody Garwood Tulsa, OK Full disclosure must be made available to the public regarding all aspects of securities trading on the open market.


Author: William Heiser at Internet Date: 04/26/2000 10:37 AM Normal TO: RULE-COMMENTS at 03SEC Subject: "Proposed Regulation FD: File No. S7-31-99" ------------------------------- Message Contents Dear SEC - As an individual investor in public companies, I support this proposed regulation. Why should analysts who may not even have a financial stake in a company that I own have access to information before I do? Thank you for considering this new regulation. Sincerely, William Heiser


Author: "Jay Horne" at Internet Date: 04/26/2000 12:32 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents As an American I feel an abiding responsibility for my own self-interest. I am therefore fully behind the proposed new regulation regarding public disclosure. Cheers, Jay Horne


Author: Crickett Hutchinson at Internet Date: 04/26/2000 9:01 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD:File No. S7-31-99 ------------------------------- Message Contents Level the playing field!!! Crickett Hutchinson


Author: "Jeck; Steven L" at Internet Date: 04/26/2000 10:45 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I want to register my support for proposed regulation FD: File No. S7-31-99 intended to stop selective disclosure of financial information. In any other context, the current common practice of selective disclosure would be considered a flaw tantamount to "insider trading". My views are my own and not part of any corporate policy or opinion. Sincerely, Steven Jeck 106 Virginia Drive Chapel Hill, NC 27514


Author: "David W. Jimenez" at Internet Date: 04/26/2000 9:40 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Please stop selective disclosure to Wall Street insiders. The public must have the same information in the same time frame to prevent share price manipulation. David Jimenez Wright Williams & Kelly 39 California Avenue, Suite 203 Pleasanton, CA 94566 925-485-5711 925-485-3791 fax www.wwk.com


Author: herbert katz at Internet Date: 04/26/2000 8:10 AM Normal TO: RULE-COMMENTS at 03SEC Subject: prop reg FD S7-31-99 ------------------------------- Message Contents I AM AN ACTIVE INVESTOR. THE THOUGHT THAT I NEED AN ANALYST TO INTERPRET INFO IS JUST DOWNRIGHT FOOLISH. THESE KIDS DONT HAVE THE TIME OR THE EXPERTISE THAT MAY STOCKHOLDERS AND INVESTORS HAVE, INCLUDING EX-ANALYSTS! ITS SILLY THAT CRAMER AND HIS ILK CAN LISTEN IN ON PHONE BRIEFINGS AHEAD OF THE CROWD AND SWITCH POSITIONS AND SCREW THE PUBLIC. WITNESS HIS DISCLOSURE THAT HE WENT FROM LONG MSFT TO SHORT IN THE BLINK OF AN EYE WHILE MOST INVESTORS DIDNT HAVE THIS INFORMATION. WHY CANT THE PUBLIC LISTEN IN ON ALL THIS INFORMATION. THE FACT THAT THIS IS EVEN UP FOR DISCUSSION IS A THROWBACK. FULL DISCLOSURE NOW... THANKS ANON.


Author: "Keenan; Rich" at Internet Date: 04/26/2000 8:14 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents As a stockholder (read: OWNER) of several companies, I am writing to ensure that I can obtain the same information on MY companies as Wall Street analysts get. The fact that this even has to be an issue amazes me, since I am a partial OWNER of these companies, and information is currently being kept from me. Thank you, Rich Keenan


Author: Kirk Kinder at Internet Date: 04/26/2000 10:20 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I just wanted to write and say I agree that all parties should be privy to company information when it is first released, not just Wall Street analysts. I am a personal investor who makes my own decisions on my investments with no help from Wall Stree pros. So their major argument that they are "protecting" the public by gaining this information before the public is not true in my case. In fact, I would say the "protecting" of the public is the last thing on their agenda. Controlling this information allows them to alter their ratings and mutual fund holdings thereby creating more wealth for them via several different avenues. I own only a handful of companies, but I follow them closely as they represent my future. Generally, I am a buy and hold investor, but I should still be able to receive company information the same time as every party...it is only fair and just. Thank you, Kirk Kinder


Author: "Bob Lay" at Internet Date: 04/26/2000 12:27 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents It's way past time to stop the information embargo that permits Wall Street professionals an unwarranted advantage over individual investors when information is allowed to be disseminated to the professionals in advance of release to the general public. In spite of the professionals protestations that it is important that they be allowed to fully digest this information and then re-release it to "the unwashed" it is clearly inappropriate that they be given an unfair advantage, as they have been granted to the present. It seems to me an apt parallel is the fact that it is illegal for company insiders to act on information prior to its public release yet investment professionals try to make a case that it is in the public interest for them to be able to do so, to the financial detriment of individual investors. Please allow us individuals to learn the same information concurrently with the Wall Street professionals. Their interpretation of the corporate information release(s) can still be given the public, but at least the public would have the same information timely -- which I think is patently fair and appropriate. Thanks for your consideration. Robert H. Lay, Independent Investor 1005 Canterbury Court Davenport, IA


Author: Roger Lucas at Internet Date: 04/26/2000 7:08 PM Normal Receipt Requested TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Selective Disclosure is not the American way. All investors are created equally. All investors, rather individual or institutional, should have the same information at the same time. Please rule your conscience. You know the right thing to do. Roger Lucas rjl1@yahoo.com 540.653.5654


Author: "Jerry Lucas" at Internet Date: 04/26/2000 1:39 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I feel analysts perform repetitive, unnecessary, and duplicitous functions in the U.S. capital markets. These ANALysts do not need better information than the participants in the market. In addition, millions of investors do peruse prospectuses and periodic reports which is why the analysts perform a duplicate task. The claim that analysts make the markets less volatile is somewhat true, but volatility can be reduced further still by information be spread to the masses real time, rather that conducted through the analysts first. It is equally ludicrous to state that analysts spend much of their time ferreting out negative information about companies, as much as it is to say I need analysts' help picking stocks to beat the S&P500 index. After all, Wall Street is arguing that maintaining the current system is not just in its own interests, but in yours as well, which is clearly a lie. Wall Street is only interested in it's own pockets, and could care less about mine. Wall Street is clearly afraid of losing the monopolistic grip on the markets it has enjoyed since birth. Viva the individual investor and my he or she reign supreme with equal and timely access to information.


Author: Pat & Jude Maher at Internet Date: 04/26/2000 11:29 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents A long overdue proposal. Excellant work. Implement it. Thomas Maher


Author: "SCOTT MCGOWAN; FIRST OPTIONS/SCMS" at Internet Date: 04/26/2000 11:16 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed RegulationFD:File No. S7-31-99 ------------------------------- Message Contents I believe full disclosure is imperative to our free market system. All information should be disclosed simultaneously to the public,press and any interested party. D. Scott McGowan SCMS LLC Chicago


Author: Amir Mian at Internet Date: 04/26/2000 10:34 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents STOP SELECTIVE DISCLOSURE!!!!!!!!!!!!!!!!!!!!!!!!!!! Amir Mian


Author: david michalek at Internet Date: 04/26/2000 12:13 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Dear Sirs I strongly support Proposed Regulation FD: File no. S7-31-99. I am a private investor. I would like the playing field to be leveled. Sincerely David Michalek 1195 Morning Glory Lane Bartlett, Illinois 60103


Author: "Carter Newbold" at Internet Date: 04/26/2000 11:53 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents As an analyst with an institutional money management firm, I would like to add my support to the FD proposal. While the prevailing system might be deemed advantageous to institutional investors, I believe that it is rife with conflicts of interest and favoritism. The resulting asymmetries seem to increase price volatility and foster serious skepticism about the fairness of capital markets. These factors would seem to push capital costs above their optimal levels. Arguments by the SIA that sell side analysts provide a valuable filtering apparatus between companies and investors seem illogical. Sell side analysts are bound by none of the constraints that characterize the "filtering" role played by media sources in other parts of society. In fact, they typically have considerable financial incentives that are wholly unrelated to the success of the purchase and sale recommendations that they make. If companies communicate equitably to all shareholders, then investment decisions will be driven more by substance than speed, insight rather than privelege. Professional analysts would once again earn their compensation not by having the best seat in the house, but by having the best ideas in the house. The nitty gritty skills of interviewing vendors, customers and competitors, assessing the cash flows of the business, and gauging the likelihood that a company can sustain a return above its cost of capital would be primary, not secondary in the analyst community. Carter Newbold Senior Vice President Rutabaga Capital Management Boston, MA


Author: Rod at Internet Date: 04/26/2000 9:35 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents As an educated and well informed individual investor I feel this proposed regulation needs to be passed so myself and others like me, can continue to invest wisely. Thank you Rod O'Brien


Author: "Petersen; Rock" at Internet Date: 04/26/2000 10:16 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents As an investor myself, and with the other individuals with whom I consider friends and fellow investors, give us the above noted regulation so as to level the playing field. It behooves the public at large to have the information that is necessary to make informed decisions. Do not allow the current system of limited distribution of information to remain. Best Regards, Rock Petersen ****************** W. R. Petersen, CPA Controller Furuno USA, Inc. 4400 NW Pacific Rim Blvd. Camas, WA 98607-9408 Telephone: 360-834-9300 Facsimile: 360-834-9400 Internet: www.Furuno.com E-Mail: rock@furuno.com ******************


Author: Joe at Internet Date: 04/26/2000 10:44 AM Normal TO: RULE-COMMENTS at 03SEC Subject: "Proposed Regulation FD: File No. S7-31-99" ------------------------------- Message Contents As an investor, I am very much in favor of open and fair disclosure and very much opposed to selective disclosure. Joe Phernetton Cedar Rapids, IA


Author: "Michael S. Pomorski" at Internet Date: 04/26/2000 12:40 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents To whom it may concern: The fact that companies are able to tell analysts vital information while not informing the shareholders, who are in fact part owners of the company, of such information bothers me to no end. It is not only unfair, it is also a violation of the principles of fairness and equality our society and nation are based upon. If the information is deemed "sensitive" by the company, how can they justify telling scores of analysts who may or may not be shareholders while keeping this information from those who in fact own the company and have as much to gain or lose by knowing this information as the directors themselves? By giving analysts selective disclosure, the individual investor becomes dependant on them, thus allowing the analyst to charge the investor whatever they want in exchange for information regarding their own company! This cannot continue. In this day and age of high-tech internet access and unprecedented levels of computer access this information should be made available to all so they can come to their own conclusions about the actions and prospects companies they partially own or wish to invest in. This bill must pass! Sincerely, Michael S. Pomorski


Author: Larry Prokop at Internet Date: 04/26/2000 10:09 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Dear SEC, I support the proposed regulation FD: File No. S7-31-99. I think it is in the best interests of individual shareholders and the stock market in general. I hope you will enact the proposed regulation. Sincerely, Larry Prokop Rochester, MN


Author: Robert Raptis at Internet Date: 04/26/2000 11:06 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Reg. FD:File No.S7-31-99 ------------------------------- Message Contents Fair Disclosure: We the people do understand what Fair and Ethical means and be aware we would appreciate more fair treatment. Please empower the the new proposed Fair Disclosure Rule. The market has changed and can no longer be totally dominated by the powerfull insiders. Robert Raptis, small investor but one of MANY finder@acclink.com


Author: "Richter; David" at Internet Date: 04/26/2000 8:09 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I applaud the SEC's proposed fair disclosure regulation. Professional market analysts have no more right to a company's prospects than its owners, the shareholders. Please add my voice to the many in favor of this common-sense proposal. Dave Richter fidricht@dof.ca.gov (916) 445-0211 x.2857


Author: at Internet Date: 04/26/2000 1:04 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD; File No. S7-31-99 ------------------------------- Message Contents please pass the proposed regulation FD; File No. S7-31-99. Thank you. Angel Rodriguez 5581 Joe Wilson Rd Midlothian, Tx 76065


Author: at Internet Date: 04/26/2000 7:18 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Hello, I highly recommend this proposal: Proposed Regulation FD: File No. S7-31-99 Best Regards, Vladimir Shcherbina IBM Staff Member Tel: 972-4-8296446 Fax: 972-4-8550070 053-790467 shcherb@il.ibm.com IBM Haifa Research Lab, Matam, Haifa 31905, Israel


Author: Eric Smith at Internet Date: 04/26/2000 11:04 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I am appalled at the SIA's opinion that I, as an individual investor, can't make my own investment decisions. In a documentary on the stock market shown on CNBC, they showed how much of a mess things were when companies didn't have to give out information. Giving it to just the lucky few is just as bad. The analysts can't possibly be objective with the information, considering the fact that they handle underwriting for the companies that they "analyze". The time for full disclosure is here. Please pass this regulation as soon as possible. Sincerely, Eric Smith Individual Investor -- Eric Smith eric@northcomp.com


Author: "Warren Sprague" at Internet Date: 04/26/2000 9:42 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents This regulation should have begun years ago.


Author: Ken Strong at Internet Date: 04/26/2000 11:37 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I strongly feel that this proposed regulation should be enacted. If a company is publicly traded, then all information about it should be evenly and fairly distributed to the public; no one should have preferential access to knowledge of the company's workings. This is common sense, or should be; it's amazing that it's not the law already. Those stock analysts who are really performing services of value to their customers will not be adversely affected by this regulation. Better that information be allowed to flow freely, to allow investors of all sizes and levels to make their own informed decisions about what to do with their hard-earned money. Kenneth Strong


Author: Paul Takeuchi at Internet Date: 04/26/2000 1:34 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents I heartily support this regulation. Capitalism should support the democratic way of free and totally accessible information flow. We pay brokers commissions and spreads; timely information should not come at a cost as well. -- Paul Takeuchi Brooklyn, NY 11217


Author: "Luke Threinen" at Internet Date: 04/26/2000 12:14 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents In browsing through the SIA's arguments in opposition to this proposal, I find it difficult to reach any conclusion other than that the SIA's primary aim is the preservation of the financial security of the companies for which the analysts of which it speaks work. The main (substantial) argument by the SIA is that the "analysts [together with the media] perform a necessary...function" in the marketplace. Also, they state that "(t)he alternative model of millions of individual investors and potential investors poring over prospectuses and periodic reports is highly theoretical and out of sync with the real world". However, this argument does nothing more to oppose this proposal than possibly leave an uneasy feeling in the reader. The reader may agree with what is said and, knowing that the SIA opposes this proposal, feel that they too ought to oppose it. The fact is that even if both of these assertions are true, they have little bearing on this proposal. The proposal as I understand it would not prohibit analysts and media from performing the same job they do now, nor would it force these 'millions of individual investors' to pore over all available information by being cut off from the services of the aforementioned analysts and media. What it would do, simply, is ALLOW these 'millions' to perform their own analysis should they elect to do so without paying the costs inherent in having their analysis done by others. I hardly find this to be a dangerous proposition; in fact, it seems only fair. Thank you for your consideration. Luke Threinen Minneapolis, MN


Author: "Steve U" at Internet Date: 04/26/2000 1:08 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents To whom it may cocern, I would like to voice my opinion on the change in rules (Proposed Regulation FD: File No. S7-31-99) that would make companies give the public the same information that is now given exclusively to analyst or the media. This abuse of inside information should not be allowed. The public should have the right to make decisions based on the primary information and not only after it is released through select securities analysts or the media. This does not in any way preclude the future role of analysts for those who choose to use them. However, it avoids complete reliance on the subjective opinion of the media and analysts as sources of important financial information. Yours truly, Stephen Ullrich 4713 Rams Head Court Rockville, MD 20853


Author: at Internet Date: 04/26/2000 1:02 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents As an individual investor who does not rely on professional analysts to make investment decisions, I strongly urge you to approve Regulation FD. It is the right thing to do in the interest of fairness to all of the investing public. George E. Ulrich 4472 Deer Trail Sarasota, FL 34238


Author: Jean-Paul Voilleque at Internet Date: 04/26/2000 8:50 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents The SIA's recent filing arguing against Regulation FD is out of touch with the status of the individual investor in today's market. The more information is readily available to individuals the greater the efficiency. Transparency and full disclosure help to prevent fraudulent speculation of the "hot tip" variety. They also make public discussion of stocks in Internet forums self policing. The idea that the average investor cannot understand or would not sufficiently scrutinize financial data is insulting. The SIA makes this claim not on the basis of any actual fact; rather, it makes the claim because the network of power that currently controls financial information is a source of enormous wealth for those fortunate enough to be a part of it. It is an access gap that prevents individual investors from making informed decisions, not a lack of math skills. The SIA seems to think that this closed circuit of information is a good thing, because analysts can then pursue their inquiries in private, thus (somehow) increasing the quality of their reporting: "Due to fierce competition among analysts to obtain the best information, they will be reluctant to ask questions in an open session that tip off their competitors as to the direction of their thinking or information that they think would be meaningful. If the questions cannot be asked in private, they may not be asked at all. Is that good for the market?" Two questions back at this tottering structure should be enough to break it. 1. If an analyst thinks a piece of information is meaningful, does the SIA honestly believe that others will not think it is meaningful? The fact that an analyst must work hard to develop credible opinions should come as no surprise. We all want to have a defensible position with regard to our recommendations. We all need data to do that. Certainly it's better to be able to form your own conclusions. This speaks again to the unjustified lack of faith in the individual investor. 2. If an analyst will not ask a question in public, would he mind awfully if the public asked the question for him? The entire crux of the argument from the SIA rests on the assumption that the analyst still holds a position of privilege in terms of company information. Remove the barriers to public access and the supposed "competitive" marketplace of inquiry and analysis becomes actually competitive. I defy you to find a single thing in the SIA filing that makes a shred of sense. This rhetorical posturing is nothing more than an old-boy nudge in the ribs - "You're not really going to spoil our little game, are you? We're PALS!" Full disclosure promises nothing but good things for the market and for the investors who are increasingly building a portfolio via informed, independent assessment of individual companies. The SIA and the interests it represents are desperate to stop that because it endangers their own brand of investing. By supporting full disclosure the SEC would expand consumer choice and allow a level playing field for those who seek to take their financial future into their own hands. That, in case the SIA has forgotten, is what is known as "capitalism." -- J-P Voilleque | LookSmart Editorial (415) 348-7963 | jpv@looksmart.net "This news is old enough, yet it is every day's news." -Measure for Measure


Author: Billy Wright at Internet Date: 04/26/2000 10:40 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No S7-31-99 ------------------------------- Message Contents It seems to me that the issue should be to whom the first disclosure is made: 1. The investing public, or 2. Analysts Analysts have a business to promote - while investors have their money in the company. If the analysts get clarifications of the public disclosure later, thats fine but they certainly should not be privileged to information before the investors in the company. A private pieve of mine is that economists as a profession now are given a podium to spout their guesses and usually do it in such a positive manner that it does move the market! And they, or anyone else, can have no inkling of the immediate direction of the market. Yet they move the market artificially. It also grieves me that one man, in the form of Alan Greenspan, can sit up there and decide that the 5% of citizens without jobs are too few and therefore inflationary and heaven forbid someone is going to get a raise because the labor market is tight. How ridiculous. We get the pain before the problem and then get it again after the problem hits! Again, how ridiculous. Sorry, maybe talking to the wrong organization, but maybe not? Billy J. Wright bjw126@flash.net Albuquerque, New Mexico 87111-4167


Author: at Internet Date: 04/26/2000 11:44 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File # S7-31-99 ------------------------------- Message Contents Sirs: We respectfully disagree with the comments of the SIA regarding the proposed rule S7-31-99. We believe that it is in the best interests of the public to have access to all information, and that this information not be filtered through the analysts. It is our opinion that information passed through the analysts inevitably is subject to the "spin" of the analysts (whether intentionally or unintentionally). Please make all information regarding publicly traded companies available to the public, as it should be. Sincerely yours, Robert J. Yager and Donna Yager (individual investors)


Author: Ghassan Yammine at Internet Date: 04/26/2000 10:03 AM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Dear SEC, I support the subject proposed regulation. In my opinion, the current system gives a select group of entities an unfair advantage - over the rest of the investment community - because it provides them with inside knowledge of publicly traded companies. This regulation will level the playing field by ensuring that no one is entitled to special privileges relating to disclosure. Sincerely, Ghassan Yammine Georgetown, Texas


Author: "Zongker; Brian" at Internet Date: 04/26/2000 12:09 PM Normal TO: RULE-COMMENTS at 03SEC Subject: Proposed Regulation FD: File No. S7-31-99 ------------------------------- Message Contents Please insure that the selective disclosure rules be removed and allow the playing field to be leveled for the small investor. Thanks, Brian Zongker

http://www.sec.gov/rules/0426b04.htm


Modified:05/16/2000