SEC<----------INSIDERS MUST WAIT TO TRADE!!!!!!!!!!ATTENTION !!!READ all ABOUT IT!!!!!!
( WE ALL KNOW THEY WONT WAIT AND WILL CONTINUE TO MAKE 'ERRORS" ) Just more shorting Oppurtunities.
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BN U.S. SEC to Issue Guidance Limiting Executives' Stock Trades
Apr 29 1999 13:35
U.S. SEC to Issue Guidance Limiting Executives' Stock Trades
Washington, April 29 (Bloomberg) -- The U.S. Securities and
Exchange Commission soon will issue legal guidance directing
executives to postpone trading stock until their companies
disclose potential market-moving information, SEC officials said.
The SEC's planned guidance on ''materiality,'' aimed at
curbing possible inside trading and increasing corporate
disclosure, seeks to clear up confusion about what information is
so significant that it needs to be disclosed, SEC Chief
Accountant Lynn Turner said.
The way some U.S. businesses interpret securities rules on
disclosure of ''material'' information, companies only must
announce developments that could increase or decrease company
profits between three and 10 percent.
''We think the guidance will rein in the executives playing
on the fringes, making intentional errors, and bring them to
where the vast majority now are,'' Turner said in an interview.
The long-awaited ''staff accounting bulletin'' is due to be
released within the next month, SEC General Counsel Harvey
Goldschmid said. It will make clear that a 1976 U.S. Supreme
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Court ruling prohibits an executive from trading his company's
stock until the corporation discloses any potentially market-
moving information, he said.
An accounting executive said the SEC's bulletin will help
fill a void.
''Any guidance for companies and auditors will be good,''
said Bob Kueppers, a partner with Deloitte & Touche LLP, a Big-
Five accounting firm. ''We now handle these issues on a case-by-
case basis.''
Questions About Trading
Questions about when executives should trade stock when they
know information that hasn't been announced to the investing
public arose this week in connection with stock purchases by
Chock Full O'Nuts Corp. Chairman Norman Alexander.
Alexander bought more than 530,000 company shares, at $5 a
share, in February. Chock Full O'Nuts hadn't disclosed that the
company had previously received buyout offers from Sara Lee Corp.
at a higher price.
Money manager Mario Gabelli, who says his funds hold a 15.8
percent stake in Chock Full O'Nuts, has called for Alexander's
resignation, saying the chairman's purchases raised ''moral and
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ethical questions.'' Chock Full O'Nuts shareholders have filed at
least three lawsuits this week seeking the return of any profit
from insider stock purchases.
Chock Full O'Nuts shares have risen 50 percent since Sara
Lee last week said it renewed its previously unsuccessful effort
to buy the New York-based coffee company. Chock Full O'Nuts last
week said it rejected an offer of $10.50 per share. Company,
which traded at 6 3/8 before the Sara Lee bid was disclosed last
week, fell 3/16 today to close at 9 9/16.
Months After Last Contact
Chock Full O'Nuts executives have said that when Alexander
bought shares in February the trades occurred four months after
the company's last contact with Sara Lee. An Alexander trust and
a company he controls bought the shares at the request of the
seller, and received clearance from legal counsel to make the
purchase, a company spokesman said.
The SEC's definition of ''materiality'' -- the kind of
information that must be disclosed -- will call for a qualitative
assessment, rather than a numeric measure, said Goldschmid, the
agency's general counsel.
As an example, he cited a company that has information --
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about an expected merger write-off, a restructuring charge, or
research and development expenses -- likely to affect its profits
by less than 3 percent. If this information could substantially
affect the stock price, it is considered ''material'' and must be
disclosed -- even if it won't have much effect on the bottom
line, Goldschmid said.
''Any executive that buys or sells the stock before the
disclosure is clearly trading on inside information,'' Goldschmid
said.
--Neil Roland in Washington (202) 624-1868/ge/bd
Story illustration: For graph of Chock Full O' Nuts stock price:
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LWIN is fine and dandy..not worried about it in the least bit. |
