JT, let's start this week off with some good news for investors. I picked this up off of "Gribbit" on the Raging Bull thread:
OT: From the analysts group: "Great News for Small Investors: The End of Selective Disclosure!
On Thursday, the Securities and Exchange Commission (SEC) approved a rule that prohibits companies from disclosing market-sensitive information to analysts and institutional investors while excluding the general public.
The move is being cheered as a victory for individual investors, while it's pooh-poohed on Wall Street with the brokerage industry claiming it will cause an "information blackout" that will actually hurt investors.
The Fact Sheet distributed at this SEC vote sets the issue up in these words:
"On December 20, 1999, the Commission proposed new Regulation FD -- for 'fair disclosure' -- to combat selective disclosure. Selective disclosure occurs when issuers release material nonpublic information about a company to selected persons, such as securities analysts or institutional investors, before disclosing the information to the general public. This practice undermines the integrity of the securities markets and reduces investor confidence in the fairness of those markets. Selective disclosure also may create conflicts of interest for securities analysts, who may have an incentive to avoid making negative statements about an issuer for fear of losing their access to selectively disclosed information.
"Regulation FD would require that when an issuer intentionally discloses material information, it do so publicly and not selectively. The company may make the required disclosure by filing the information with the
Commission, or by another method intended to reach the public on a broad, non-exclusionary basis, such as a press release. When selective disclosure of material information is made unintentionally, the company must publicly disclose the information promptly thereafter."
The Fact Sheet then notes that the proposed rule prompted an "outpouring of public comment - nearly 6,000 comment letters. The vast majority of the comments were from individual investors who urged -- almost uniformly --
that the Commission adopt Regulation FD. These investors expressed frustration with the practice of selective disclosure, believing that it places them at a severe disadvantage in the market."
The Fact Sheet also noted that the securities industry urged the SEC to continue allowing the practice of selective disclosure.
Democracy prevailed this, and the individual won out over big money. We'll cover this important event with more details in the upcoming weeks, but in the meantime, let the celebrating begin.
Has this been a momentous week for the little guy or will the Wall Street Wise find a way to beat the SEC on selective disclosure?
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