Steve, thanks for the conference report. I am one of the professional investors who responded to the survey and I am deeply disturbed by the sentiment against information disemination on the internet. In enacting to Securities Acts of 1933 and 1934 and the many subsequent amendments thereto Congress's main intent was to foster integrity in the securities markets by legislatively insuring a level playing field and the opportunity for equal information for all investors. The advice given by the lawyer at the conference is in direct conflict with this intent. I wonder if he(or she) sees the irony of that position. Only allowing professionals and analysts to have detailed forward looking information creates two classes of investors and undermines, with good reason confidence in the markets.
Steve I also take issue with some of the specific reasons including some of the specific legal advice.
First--1) Everything posted in cyberspace is available to plantiffs' attorneys, enabling them to construct more plausible complaints in shareholder lawsuits.
Congress amended the Security Laws last year to limit class action lawsuits and specifically created a safe harbor for forward looking statements. Just be circumspect as to what you post and make sure you attach the safe harbor language. Plaintiff lawyers are generally looking for massive price movements. Info material enough to cause such a movement should not be wispered to analysts. If it is appropriate to disseminate it should be in a press release.
2)--) Posting forward-looking information in cyberspace creates a legal duty to update that information whenever conditions change.
Thats news to me. What legal precedent is cited for that little tidbit. If its material it should be in a press release anyway. Too often lawyers get useto a certain way of doing things and have trouble reacting to changes in the world. The internet has changed the playing field and the rules like it or not.
3)Individual investors don't move stocks; only sell-side analysts and large institutional investors do, according to a defense attorney who represents companies in shareholder lawsuits. Thus, in his view, candor in cyberspace carries significant risks but no significant benefits.--
So we know have defence litigators thinking their experts on what causes stock movements. There is substantial empirical evidence that this is not true, especially in smaller less covered companies such as GZTC and GENZL. Has this lawyer ever heard of Iomega. I am not reccommending buying that stock but there is little question that the upward movement in that stock was stimulated by individual investors. I suspect the same is true of many smaller companies.
4. According to this lawyer, companies should give earnings guidance, forward-looking statements, and detailed, non-material information only verbally and only to sell-side analysts and institutions. He also warned us not to make conference call playbacks or transcripts avaliable to individual investors and not to allow the staff of the Motley Fool onto our conference calls.
This is such Bullsh... Frankly if an individual investor is excluded from such a call and a playback is not made available and info from the call is material the individual investor may have a good lawsuit. I don't want to beat a dead horse but this is totally antithetical to the intent of the law
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