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Strategies & Market Trends : TATRADER GIZZARD STUDY--Stocks 12.00 or Less..... -- Ignore unavailable to you. Want to Upgrade?

To: stock talk who wrote (11555)	10/17/1999 9:41:00 PM
From: stock talk	Read Replies (1) \| Respond to of 59879

'll believe it when I see it (or don't hear it) Top Financial News Sun, 17 Oct 1999, 12:43pm EDT SEC Planning a Crackdown on Selective Disclosure, Chairman Levitt Says By Liz Skinner and Kathie O'Donnell SEC Cracking Down on Selective Disclosure, Chairman Levitt Says Boston, Oct. 16 (Bloomberg) -- The Securities and Exchange Commission plans to crack down on companies that disclose potentially market-moving information to securities analysts before releasing it to the general public, said SEC Chairman Arthur Levitt. 'Very often there are CEOs'' that become ''obsessed'' with increasing their company's stock price, so they ''embark upon a program of seduction'' of research analysts by giving them ''a few hints'' about certain business events, Levitt said in Boston after giving a speech at a personal finance conference. ''That practice is downright deceptive, verges on illegality, and is something that the commission is going to focus very closely on over the course of the next six months,'' Levitt said. ''We're going to promulgate the public discussion, consider a number of regulations, and we're going to crack down hard where we see abuses developing in that area.'' Companies ranging from Microsoft Corp. to Wal-Mart Stores Inc. to Exxon Corp. failed to invite all shareholders to participate in telephone conference calls in recent months in which company officials discussed earnings, investments, and other matters with analysts and institutional investors. Just last week, Abercrombie & Fitch Co. warned a Lazard Freres & Co. analyst of sluggish fiscal third-quarter sales, five days before the clothing retailer made the forecast public, sending its shares tumbling 19 percent, a personal familiar with the disclosure said. SEC officials say they plan soon to propose new selective- disclosure rules as part of a larger SEC review of insider- trading regulations that began early this year. The inquiry comes amid evidence that companies are providing information about profits, production plans, and mergers to analysts before announcing the news to the public. Tell the Public SEC staff will recommend a rule that requires a company to tell the public before, or at the same time, that it notifies analysts and institutional investors of information likely to affect its stock price, the commission's general counsel Harvey Goldschmid said last week. Company officials have said there are practical reasons to be considered, including the technical difficulties of inviting an unlimited number of people on a conference call. In June, PacifiCare Health Systems Inc. shares fell 14 percent after the No. 1 operator of Medicare health-maintenance organizations told selected analysts that second-quarter earnings would fall short of forecasts. ConAgra Inc. shares fell 9 percent in March after the second largest U.S. food company excluded some investors from a conference call in which executives warned that fourth-quarter profit would fall short of expectations. ConAgra officials couldn't be reached for comment and a PacifiCare spokesman has said the company stands by its action. Sell-Side Analysts The SEC staff selective-disclosure proposal will be submitted to the commission as early as next month, Goldschmid said. The five commissioners, led by Levitt, then will decide whether to issue the proposal for public comment. After the comment period, the commissioners would have to decide whether to give final approval to the rule. John C. Coffee, a Columbia University professor and securities law expert, said companies want the control to keep out certain analysts. ''They like to limit calls to the sell-side analysts, the people working for underwriters,'' Coffee said. In Boston, Levitt also said his agency will be looking into the overall relationship between analysts and the companies they track. ''I wonder why so many analysts just proliferate the number of buy recommendations,'' he said. ''Sell recommendations seem to be as rare as Barbara Streisand concerts in America. ''I wonder about the relationships that those analysts may have with firms that represent clients that they are writing about.'' The chairman said his agency also is concerned about a mutual fund performance advertising practice that he called deceptive. ''Very often mutual fund companies will use a very tiny, five or ten million dollar fund and then try to interpolate those results in a billion dollar fund,'' Levitt said. He said the commission will be cracking down on funds that engage in this practice. Finally, speaking mostly to small investors, Levitt also warned his audience to be wary of Internet sites that promise a quick fortune, to investigate sales charges before investing in mutual funds, and to ask their brokers exactly how they are paid. bloomberg.com.