Regulation FD
Quick Definition
SEC rule requiring public companies to disclose material information to all investors simultaneously, preventing selective disclosure.
Key Takeaways
- Requires simultaneous public disclosure of material information
- Prevents selective disclosure to favored analysts or institutional investors
- Unintentional disclosures must be made public within 24 hours
- Adopted in 2000 to level the playing field for all investors
- Disclosure can be made via SEC filings, press releases, or public webcasts
What Is Regulation FD?
Regulation Fair Disclosure (Reg FD), adopted by the SEC in October 2000, requires that when a public company discloses material non-public information to certain individuals (such as analysts, institutional investors, or shareholders who may trade on the information), it must simultaneously make that information available to the general public. If the disclosure is unintentional, the company must promptly disseminate the information publicly, typically within 24 hours. Reg FD was enacted to address the practice of selective disclosure, where companies would share earnings guidance or other material information with favored analysts or investors before the general public, giving them an unfair trading advantage. Public disclosure can be made through SEC filings, press releases, or webcasts that are broadly accessible.
Regulation FD Example
- 1After a CEO inadvertently shared quarterly revenue figures with an analyst during a private meeting, the company had to issue a press release within 24 hours under Reg FD.
- 2Companies now host public earnings webcasts rather than private analyst calls to ensure compliance with Regulation FD's simultaneous disclosure requirements.
Related Terms
Material Information
Any information that a reasonable investor would consider important in making an investment decision, and that could affect a security's price.
Insider Trading
The illegal practice of trading securities based on material, non-public information obtained through a position of trust or confidence.
SEC (Securities and Exchange Commission)
The primary U.S. federal agency responsible for regulating securities markets, protecting investors, and enforcing federal securities laws.
Form 8-K
A current report filed with the SEC to announce major events or material changes that shareholders should know about between regular filings.
Quiet Period
A legally mandated period when a company's communications with the public are restricted, typically before an IPO or around earnings announcements.
FDIC
Independent federal agency that insures bank deposits up to $250,000 per depositor, per institution, and supervises financial institutions for safety and soundness.
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