Selective disclosure-Levirt says 'stain' on the market-Well do some about it then.
Bob:
This Levitt guy is full of sh*t,all talk and no substance.If he is serious why doesn't he do something about it.I never did like companies inviting analysts (sometiems reporters) to special pow-wow and give them information that we don't get.We only get the analysts take on it,I rather hear it myself and make up my own damn mind.
Then Levitt goes on to say the U.S market is not a level playing field,well helloooooooo! We already know that.
Oh BTW: This article with along with my personal comments are going to Dell and other companies I own,courtsey of me.I'll give a piece of my too,you bet.<g>
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(courtsey:Bloomberg)
Top News
Thu, 19 Nov 1998, 3:00pm EST
U.S. SEC Chief Levitt Says Selective Disclosure a 'Stain' on Markets.
Washington, Nov. 19 (Bloomberg) -- U.S. Securities and
Exchange Commission Chairman Arthur Levitt condemned U.S.
companies that reveal market-moving information to securities
analysts before releasing it to the public.
''As far as I'm concerned, that's cheating, and it's a stain
upon our market,'' Levitt said in an interview. ''We're clearly
concerned about it, we're clearly looking for it.''
Some executives routinely exclude reporters from conference
calls they convene with analysts and money managers who follow
their companies. In some recent cases, stock prices moved more
than 25 percent after companies disclosed information in private
sessions. Sometimes, hours passed before companies announced the
news to the public.
Levitt said this practice, known as selective disclosure,
puts small investors at a disadvantage to institutional
investors, such as pension and mutual funds, that have analysts
to represent their interests.
The practice also can harm the integrity of U.S. markets,
Levitt said. ''If some individuals or organizations are getting
information that others are not getting, that means our markets
are no longer trustworthy and no longer credible, and that can't
be tolerated,'' he said.
Excluding Press
Levitt, the top securities regulator in the U.S., warned
against special treatment of favored analysts or big investors in
a February speech. Companies and brokerages could face insider
trading sanctions if analysts or their clients profit from
important corporate information before it's available to the
public, he said.
The SEC chairman went beyond those earlier remarks by
explicitly urging companies to include reporters in their analyst
calls. He voiced support for news organizations that try to gain
access to these calls and then report on the discussions.
''The media should persist,'' said Levitt, who used to own
''Roll Call,'' a Washington newspaper that covers Congress.
''They should press their case and continue to press it.''
Some executives prefer to provide exclusive briefings ''to
curry favor with selected analysts'' who can influence the price
of the company's stock, the SEC chairman said. He declined to
give examples.
In recent weeks, a number of major companies such as MCI
WorldCom Inc., Microsoft Corp., Amgen Inc., Gap Inc., Monsanto
Co., and Cendant Corp. held closed discussions with analysts
about company earnings or other corporate developments.
Tellabs Disclosure
In September, Tellabs Inc., a telephone equipment maker,
told some money managers and analysts on a conference call that
its third-quarter profit and sales wouldn't meet estimates. The
Lisle, Illinois-based company's shares fell as much as 27 percent
after the call began and before the information was more widely
disseminated.
Tellabs Chief Executive Michael Birck said at the time his
executives weren't planning to make significant comments in the
session with analysts. ''We didn't think we were announcing
anything of consequence there,'' he said.
Levitt said his staff is monitoring corporate practices on
selective disclosure of important corporate information, and is
prepared to take enforcement action if necessary.
''It's clearly ethically wrong,'' he said. ''It wouldn't
surprise me to see the commission considering taking action if
the offense is sufficiently egregious.''
The commission won't be preparing any rule changes to cope
with the problem, Levitt said, because companies have improved
their practices since he criticized selective disclosures earlier
this year. ''I have seen progress and I'm hopeful that we'll see
more,'' he said.
Improvements Seen
A National Investor Relations Institute study earlier this
year found that fewer than 20 percent of companies inform
analysts before telling the public that earnings will fall short
of expectations. That's down from about 33 percent in 1995,
according to NIRI, a trade group of corporate investor-relations
officers.
Northern Telecom Ltd., North America's No. 2 telephone-
equipment seller, told analysts and money managers at a September
meeting in New York that second-half revenue growth would be less
than expected because of disappointing demand in Europe and Asia.
Northern Telecom's stock fell 13 percent that day, to 35
1/2. The Brampton, Ontario company issued a public announcement
four hours after shares began to fall and three hours after
trading was halted.
Northern Telecom Chief Executive John Roth explained the
delay in the company's announcement, at the time, by saying: ''We
had to understand what people thought they heard. We were
surprised with the reaction in the marketplace.''
Recent Examples
IXC Communications Inc. told analysts and some investors in
a conference call yesterday morning that fourth-quarter results
wouldn't meet analysts' expectations. The company didn't issue a
statement until 1:30 p.m., after trading had been temporarily
halted. The wholesale phone company's shares dropped 25 percent
yesterday, falling 9 to 26 3/4.
''We miscalculated the market reaction and the extent of the
market's interest in this,'' said IXC's chief financial officer,
Jim Guthrie. ''When we saw it had a larger effect, we moved as
quickly as we could to issue a press release.''
Last week, Dell Computer Corp. excluded reporters from a
conference call after the world's No. 3 personal computer maker
reported fiscal third-quarter earnings. Dell is one of the most
actively traded stocks in the U.S., with an average daily volume
of about 39 million shares in the last three months.
''We just historically haven't included folks outside the
analyst community,'' Dell spokesman T.R. Reid said at the time.
Levitt, though, said he plans to keep pressing so that
companies provide important information to the press and public
investors at the same time it's available to Wall Street
professionals.
''We will continue to urge companies to see to it that
disclosure is to the broadest possible audience, and the practice
of selective disclosure is eliminated, because it really is wrong
and hurts our market and jeopardizes the interests of
investors.''
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