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To: Morpher who wrote (7822)	12/14/1999 5:23:00 PM
From: TFF	Respond to of 12617

SEC Prepares Rule on Stopping Corporate Selective Disclosure SEC Prepares Rule on Stopping Corporate Selective Disclosure Washington, Dec. 14 (Bloomberg) -- Papa John's International Inc.'s shares fell almost 22 percent last Thursday after the fourth-largest U.S. pizza chain told some brokerage analysts that fourth-quarter sales would suffer because the Christmas holiday will cut weekend pizza orders. Papa John's told the rest of the world about its projected shortfall through a press statement sent out that night, after 8 p.m. New York time. A Papa John's spokeswoman acknowledged that an official alerted some analysts so they would have the same information given in response to questions from another. ''The sell-off was no doubt led by analysts telling people at their firms what they learned,'' said Neil Gold, a securities lawyer in New York for the firm of Fulbright & Jaworski. ''That is exactly the kind of thing the Securities and Exchange Commission is concerned about, especially in the Internet age when information can be disseminated to a wide group simultaneously.'' Tomorrow, the SEC is slated to take the first step toward imposing a rule aimed at stopping companies from disclosing market-moving information to securities analysts before they release it to the general public. The commissioners will vote whether to propose a rule requiring a company to tell the public at the same time they notify analysts and institutional investors of information likely to affect its stock price. Almost daily, companies from Clorox Co. to Apple Computer Inc. to Abercrombie & Fitch Co. provide market-moving information to analysts and large investors through one-on-one conversations, conference calls, or closed-door meetings. The practice, known as selective disclosure, could give some investors the chance to trade on the information before others. Easier to Take Action The proposal to be considered by the SEC would make it easier for the agency to take action against companies. Now, the agency generally must prove that a company is expected to gain something in exchange for selectively releasing important news. The SEC hasn't filed a case alleging such violations since March 1991 when the commission accused the founder of Ultrasystems Inc. improving his standing with analysts by giving some of them advance notice of company earnings. Abercrombie & Fitch today disclosed that the SEC is conducting a formal inquiry into its release of a sales forecast in October. The company's shares fell 13 percent on Oct. 8, when news organizations have reported that a company executive warned one analyst of sluggish fiscal third-quarter sales. Abercrombie & Fitch made the forecast public Oct. 13. New rules on selective disclosure ''should give the SEC great teeth to take a bite out of the corporate pandering to the analytical community,'' said Fredric Russell, chief executive of Fredric E. Russell Investment Management Co., a Tulsa, Oklahoma, firm that manages $75 million. Some company executives give out selective information to curry favor with analysts whose influential buy recommendations can make or break stocks. The analysts, at the same time, covet the inside scoop, which they use to entice prospective investors to buy. 'Fair Play' The commission's proposal would strengthen SEC Chairman Arthur Levitt's campaign to coax companies to voluntarily stop holding selective discussions with analysts and institutional investors. Levitt appealed to companies in October to open their conference calls to all investors, ''in the spirit of fair play.'' At Papa John's, a spokeswoman said the company's chief financial officer, Drucilla Milby, called some analysts last Thursday morning to tell them that earnings would fall short of expectations, after she gave some earnings information to one analyst in response to his questions. ''She thought she should let the company's other sell-side analysts know what she had told the one,'' said Papa John spokeswoman Karen Sherman. Papa John's shares fell another 13 percent to 23 5/16 on Friday, the day after the company issued its press release about the earnings. Company Practices Some U.S. companies are becoming wary of private communications with analysts as the SEC prepares its rule. Louis Thompson, head of the National Investor Relations Institute, which represents corporate investor-relations executives, said some companies -- worried about what the SEC rule proposal will contain -- already have stopped the flow of information to small groups of analysts. ''I encourage companies to adopt a wait-and-see attitude and see what the commission comes out with,'' Thompson said. SEC deputy general counsel David Becker said the commission doesn't want to do anything that would stifle the free flow of information to the public. ''But we believe that picking out a few analysts and feeding them information is pernicious.'' Becker wouldn't elaborate on details about what kinds of information would be covered and how it would have to be released to the public. Opening Calls The SEC lawyer said there are legal questions about whether the agency could ''order companies to open their calls to the public' and that ''it's not clear that's the best move.'' Some have complained a press release isn't the same as listening to conference calls with analysts, because the tone of what is said could be important or new issues could be discussed beyond what's in the corporate release. Many companies already consider it standard practice to issue a news release before holding analyst conference calls. A May 1998 National Investor Relations Institute study showed that 70 percent of companies issued a press release and then contacted analysts when they realized earnings would be well below consensus estimates. That's up from 47 percent that first issued a release in 1995. If the commission votes to propose the rule changes tomorrow, the plan will be put out for public comment. After getting reaction from the industry and public, the SEC then would have to vote again on whether to approve the proposed rule change. In addition to the proposal aimed at the practice known as selective disclosure, the SEC will consider changes to insider trading regulations, including whether the SEC must prove a person actually used -- and didn't just possess -- non-public information when they decided to trade securities, the SEC said. The commissioners also will decide whether to approve changes aimed at strengthening the work of corporate audit committees, which are made up of board members designated as watchdogs for shareholders in supervising the preparation of financial reports. -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved.

To: Morpher who wrote (7822)	12/21/1999 7:06:00 AM
From: TFF	Respond to of 12617

Instinet IPO Reuters Surges as Reports Say Instinet IPO in the Pipeline By Jennifer Friedlin TheStreet.com/NYTimes.com Staff Reporter 12/20/99 1:52 PM ET Shares of Reuters Group PLC (RTRSY:Nasdaq - news) surged Monday following reports that it was planning an initial public offering for Instinet, its electronic brokerage subsidiary. London-based Reuters' American depositary receipts climbed 3 1/16, or 4%, to 81 13/16 in early afternoon trading. (Reuters finished up 2 3/4, or 3%, to 81 1/2.) A spokesman for the communications giant said the reports, which first appeared in the Sunday Times of London, were "very speculative." He declined to comment on Reuters' specific plans for Instinet, except to say that the company would continue "looking to diversify its business." Instinet controls about 15% of Nasdaq's volume. The Sunday Times of London reported that Reuters was considering floating 25% of its holding in Instinet on the Nasdaq next year at a valuation of up to 3.5 billion pounds ($5.6 billion). The Financial Times said Monday that Instinet could be valued at up to 2.5 billion pounds. Talk of an Instinet initial public offering drove Reuters' shares higher as investors recalled a wildly successful offering of another Reuters unit earlier this year, analysts said. Shares of Tibco Software (TIBX:Nasdaq - news) have more than quadrupled since Reuters took it public in July. But analysts noted that they were skeptical about whether Instinet, which faces increased competition in the online trading sector, could or would follow in Tibco's footsteps. "Tibco has a hugely successful business and they are at the front end of their growth curve," said Jim Dougherty, an analyst at Prudential Securities, who noted that Instinet was not so well positioned in its industry. Dougherty rates Reuters an accumulate and has not done any underwriting for the company. Reuters shares have been clawing back from a 52-week low of 50 1/4 reached in September after concerns regarding Instinet's future performance sent the company's stock price tumbling. Disappointing third-quarter earnings also contributed to the shares' recent volatility. Analysts have said they were concerned about Instinet's reliance on trading volumes to generate revenue. Growing competition from Internet trading companies has also raised questions about pricing pressure. Investors' outlook on Instinet "pivots on whether Instinet is seen as a beneficiary or victim of the Internet -- that's unclear," said Mark Beilby, an analyst with Deutsche Bank in London. Alex Brown, which was acquired by Deutsche Bank, co-managed the Tibco offering. Beilby, who rates Reuters a market performer, said he was waiting to see how and when Instinet would implement anticipated plans to offer trading in fixed-income securities, establish an online retail brokerage as well as expand its overseas operations. Reuters is expected to release details of its corporate strategy, including its blueprint for Instinet, when it reports fourth-quarter earnings in February.