Information AboutRegulation Fd |
| CATEGORIES ABOUT REGULATION FAIR DISCLOSURE | |
| united states securities and exchange commission | |
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The regulation sought to stamp out Selective Disclosure , in which some investors (often large Institutional Investor s) received Market Moving Information before others (often smaller, individual investors). Regulation FD changed fundamentally how companies communicate with investors, by bringing better Transparency and more frequent and timely communications, perhaps more than any other regulation in the history of the SEC. BACKGROUND ON REG FD Before the 1990s, most individual investors followed the progress of their stock holdings by receiving phone calls from their Broker , by reading annual or quarterly reports mailed to them by the company, by reading news in newspapers or financial publications, or by calling the company with questions. Most investors relied primarily upon Full Service Broker s, such as Merrill Lynch , for trading advice.
By 1999, individual investors became more aware of quarterly analyst Conference Calls , where a company's management would disclose the results of the quarter and answer analyst questions about the company's past performance and future prospects. At the time, most companies did not allow small investors to attend their calls. One small investor, Mark Coker, founded a company called , Vcall.com, Shareholder.com and CCBN.com offered webcasting technology and services that made it more practical, and more affordable, for companies to allow all investors to listen in. In December 1999, the SEC proposed Regulation FD. Thousands of individual investors wrote the SEC and voiced their support for the regulation. But support was not unanimous. Large institutional investors, used to selectively-disclosed material information, fought vigorously against the proposed regulation. They argued that fair disclosure would lead to less disclosure. In October 2000, the SEC ratified Regulation FD. Jim Cramer , host of CNBC 's '' Mad Money '', argues that Regulation FD has been helpful to the small investor, specifically with providing access to conference calls (which Cramer recommends that investors should listen to as part of stock research). EXTERNAL LINKS
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