In a few months' time (ok, August to be exact) Reg. FD will celebrate its tenth birthday. The CC decided to celebrate early. Adopted to level the disclosure playing field, Reg. FD addressed what had been "the selective disclosure of material information to securities analysts and large investors prior to making it available to the general public." Arms, Living with Regulation FD (from 14th Annual Preparation of Annual Disclosure Documents, Ch. 14, PLI 2009). Ever since, companies have had to be more circumspect about disclosures to individual analysts, and since immateriality is the only defense to a charge of violating Reg. FD, there is ample incentive to walk the straight and narrow. But in a world where information has become commoditized, it can be difficult for even the best-intentioned company not to stray from the path every now and again, especially when employees are zipping around the web or whipping off text messages on their BlackBerrys. When a slip of even the best-kept secrets means having to broadcast them worldwide, how can companies ensure they are disclosing only what, when, where and how they want?
The CC has a couple downloads for you this week. The first is the 33-page article quoted above. Living with Regulation FD, by Abigail Arms (Shearman & Sterling LLP) offers the legal nuts and bolts, as well as all ifs, ands and buts, of the disclosure rule. That's just nice background for the second download, which dovetails nicely with one of Arms' recommendations — adoption of solid disclosure policies. As she notes, in its Reg. FD adopting release, the SEC stated, "the existence of a disclosure policy, and the issuer's general adherence to it, may often be relevant to determining the issuer's intent with regard to a selective disclosure." Of course, suggesting that your clients have a disclosure policy is different from drawing one up. For that, the CC is grateful to Isobel A. Jones (Del Monte Foods Corporation), who has provided Policy Statement Concerning Disclosure of Material Information. You can adapt this to your clients' particular needs. It is a 12-part document that defines Reg. FD for relevant employees and places it in the context of how they are to behave vis à vis communications with the investing public. A quick read confirms that these days, having a good disclosure policy is the only way to keep a secret.
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