Fair Warning on Fair Disclosure! SEC Settles Its Third Regulation FD Action

The SEC recently settled a Regulation FD action against Office Depot and several of its executives. This Update summarizes the key issues addressed in this action and offers practical guidance.

Background on the Office Depot Enforcement Action

The SEC charged that the CEO and then-CFO of Office Depot, in an effort to encourage analysts to revise downward their sales and earnings forecasts for the second quarter of Office Depot's 2007 fiscal year, arranged private calls with eighteen analysts who followed the company. During those calls, begun just eight days before the end of the quarter, the director of investor relations referred the analysts to recent earnings statements by comparable companies that discussed the effect of the slowing economy, and reminded them of statements made by Office Depot at the beginning of the quarter that referenced the softening economic climate. Although Office Depot was careful not to state directly that it would not meet analysts'