Speaking of the Disclosure rule, this is the Associated Press article of me, speaking out about the Disclosure rule.
OCTOBER 20, 19:58 EDT
Wall St. Mixed on Full Disclosure
By LISA SINGHANIA
AP Business Writer
NEW YORK (AP) — As a day trader, Kevin Eagle is used to seeing the value of his stock portfolio fluctuate. The risks don't bother him, but he gets frustrated when a stock suddenly drops for no apparent reason.
``We day traders know something's going on — but not what,'' said the 34-year-old Orlando, Fla., man. ``What's happened is an analyst has found out about something going on before the company announces negative news.'' Armed with that information, that analyst's clients are selling their shares.
``It's absolutely not fair,'' Eagle said.
The kind of situation Eagle complained about happens dozens of times each week. Companies give industry analysts or big investors a jump on material information, news or data that will affect stock prices. Sometimes the information is accidentally disseminated; but often, the heads-up is deliberate.
That may be about to change. Starting Monday, new regulations go into effect designed to provide the public and the investment community with equal access to information about publicly traded companies.
The Securities and Exchange Commission will now require full disclosure of any information that would be material to a company's stock price. Companies that don't comply could face fines, although specific penalties haven't been established.
``The rules will level the playing field when it comes to the ability of everyday investors to receive important information at the same time as the Wall Street insiders,'' said SEC spokesman Chris Ullman.
Few Wall Street watchers would dispute the value of information in today's markets, which frequently zoom up or down on the basis of rumors, but there is little consensus about what the SEC's rules will do.
Securities industry groups unsuccessfully opposed the change, contending that companies will now give out less information rather than risk violating the new rules. So investors won't see a payoff, they say.
But the industry says its members, the nation's trading professionals, are preparing to implement the SEC's order.
Figuring out what's ``material'' and what isn't appears to be a major concern of many companies.
``I think there's a lot of uncertainty among public companies right now as to what the SEC will allow,'' said Rob Adler, president of CCBN.com, which sets up online conferences between companies and industry analysts.
He said many companies are thinking of increasing their use of the Internet as a tool for releasing information.
Wells Fargo, the banking company, plans to put parts of its conferences with analysts online to comply with the new rules, spokesman Larry Haeg said.
Ullman, the SEC spokesman, is confident the rules will benefit investors. He also isn't worried that companies' free speech will be unreasonably restrained.
``If companies still want to give earnings guidance to the markets, they can. All they have to do is issue a press release,'' Ullman said.
There will be a handful of exceptions to the rules, including journalists' conversations with top executives. The rationale behind the exemption is that journalists don't trade on whatever information they might obtain in an interview.
The SEC move appears to have strong support off Wall Street. During the discussions preceding the new rules' approval, the agency received more than 6,000 comment letters and e-mails, many from individual investors who supported the idea.
But even they aren't sure of who will benefit.
``The problem is I think you're going to still have collusion. The analysts will still wine and dine chief exeuctives secretly,'' said Eagle, the Florida day trader. ``This is going to be very hard to enforce.''
This past week, the Dow Jones industrial average rose 34.41, closing at 10,226.59 after gaining 83.61 Friday.
The Nasdaq composite index rose 166.37 after rising 64.54 Friday to 3,483.14.
The Standard & Poor's 500 was up 22.76 for the week, in part because of an 8.17-point increase Friday to 1,396.93.
The Russell 2000 index, which reflects the performance of smaller company stocks, finished the week 7.06 higher, after rising 6.15 Friday to close at 487.45.
The Wilshire Associates Equity Index — which represents the combined market value of New York Stock Exchange, American Stock Exchange and Nasdaq issues — ended the week at $13.057 trillion, up $254 billion from last week. A year ago the index was $11.875 trillion. |
