Five years after the Securities & Exchange Commission (SEC) passed Regulation FD (“Fair Disclosure”) a court finally had a chance to interpret its application. On September 1, 2005 the United Stated District Court for the Southern District of New York dismissed the SEC’s claims against Siebel Systems, Inc. [1] Regulation FD prohibits a company from disclosing information to analysts and investors that is non-public. [2] Adopted
in 2000, the regulation has often been criticized for being overly
broad. However until Siebel no company challenged the regulation in
court.
Regulation
FD is based on the idea that no group should have advance access to
information about a public company that may impact stock prices or that
may influence trading. Unsurprisingly, one of the regulation’s main purposes is to prevent insider trading. In
an effort to help companies comply Regulation FD considers information
to become … Read the rest