Reg FD to be defended in front of the SEC

NEW YORK: PR and media industry executives will this week come to

the defense of Regulation Fair Disclosure at a public hearing in New

York called by the Securities and Exchange Commission.

A round-table will take place in New York on April 24 to hear from PR

executives, Wall Street bankers, media people, and smaller investors,

about how Reg FD is working six months after its introduction.

The controversial change in company rules was designed to level the

playing field between smaller investors and analysts working for major


It means companies must now simultaneously make public any information

they are providing to analysts. This change has resulted in an explosion

in Webcasting and teleconferencing of business briefings and


David Armon, president of PR Newswire, will tell the SEC that his online

service has seen a 300% hike in the number of companies Webcasting their

financial results as a result of Reg FD.

Armon told PR Week that in January the wire service saw almost 300

businesses Webcast results - compared to just 69 last year.

At the same time, the number of companies releasing mid-quarter earnings

projections rose by 67% in the last quarter of 2000, and 78% in the

first quarter of this year.

Fifteen percent of companies on PR Newswire are also making every chart

they give to analysts available to the public via the Web site.

Armon said Reg FD was doing exactly what it was supposed to: 'The new

rule has made companies more comfortable in the use of technology that

reaches the industry, the media, and the public all at the same time,

and that's been a good thing.'

Michael Lissauer, vice president of marketing for Business Wire, said

the service had unilaterally ended the 15-minute delay on sending out

company information to the public once Reg FD had been introduced.

He said Business Wire would reveal the increased numbers of companies

Web-casting their results and making public statements about performance

to the SEC this week, but declined to give any details before the


Armon and Cathy Baron Tamraz, COO of Business Wire, will be two of a

seven-member panel taking part in the session on Reg FD's impact on

media and business communication.

The other panel members are Mark Coker, founder and president of; Ron Insana, anchor at CNBC; Floyd Norris, chief financial

correspondent for The New York Times, Louis Thompson, Jr., president/CEO

of the National Investor Relations Institute; and Patricia Doran

Walters, SVP, professional standards & advocacy at the Association for

Investment Management and Research.

Some sectors, particularly the established investment banks, have been

critical of Reg FD, claiming the lack of free-flowing information is

resulting in more profit warnings and damaging confidence in the


But's Coker, who provides investors with information about

upcoming Web conferences, said critics of Reg FD were trying to exploit

the economic downturn to damage the rule change, because they do not

want greater transparency in the market.

'Of course there's more information in the public domain,' said Coker,

'but it's what you do with it that counts. Information is like a loaded

gun; you can shoot yourself in the foot with it if you're not


Others suggest the real problem is companies responding to Reg FD by

giving less information. A survey of more than 500 companies conducted

in February by the National Investor Relations Institute (NIRI) found

that 28% said they were providing more information since Reg FD was


But 24% admitted they were providing less, showing up a limitation of

the system. Companies are only required to ensure that they give the

same information to all groups - which can simply mean reducing press


Eighty-nine percent are now providing full public access to their

conference calls to discuss results, up from 60% before the new rules

were introduced.

Most were allowing public access through Webcasts. Eighty-four percent

were notifying investors and the media about conference calls through

news releases.

Seventy-three percent said they now had a policy that prevented

employees joining Internet chatrooms or having unauthorized discussions

with analysts or journalists, and 11% said they planned to introduce

such a policy.

Only 15% said they had no such policy or plans for one.

SEC spokesman John Nester said: 'We promised that we would review how

these changes were working and the round-table is part of that.' Asked

if the rule could be revised or even scrapped, Nester said nothing could

be ruled out. But he said it was unlikely any action would be taken

until Reg FD had been in operation for at least a full year.

The round-table will take place tomorrow (April 24) at the Alexander

Hamilton US Customs House Auditorium, One Bowling Green, New York, NY,

from 10am to 4:30pm. Public seating is available for up to 300 people on

a first-come, first-served basis.

The round-table discussion will also be available as an audio Webcast at


A. Adopted by the Securities and Exchange Commission on August 10, 2000,

effective date October 23, 2000. Aims to make information that affects

investing decisions more readily available to the public.

B. Rules that if a public company, or person acting on behalf of that

company, discloses material non-public information, the company must

simultaneously (for intentional disclosures) or promptly (for

non-intentional disclosures) make public disclosure of the same


C. Information must be disclosed through a method (or combination of

methods) of disclosure designed to provide broad, non-exclusionary

distribution of the information to the public. An example might be a

press release sent over a wire service with broad audience reach.

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