The SEC has recently proposed new rules regarding selective disclosure and insider trading. This Commentaries discusses these proposed rules.
Proposed Regulation FD
The SEC has proposed Regulation FD (Fair Disclosure) primarily because of concerns that some individuals, particularly analysts, receive material information from an issuer before the information is available to the public, thereby giving these individuals an advantage in trading in the issuer's securities. Regulation FD generally would require timely public disclosure of information whenever an issuer or a person acting on its behalf makes any intentional or unintentional disclosure of material nonpublic information. The proposed regulation codifies the best practices of experienced investor relations officers, although Regulation FD raises the stakes by imposing the direct threat of SEC enforcement action where previously only Rule 10b-5 concerns existed.
