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
BestCalls.com; 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 Bestcalls.com'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
Most were allowing public access through Webcasts. Eighty-four percent
were notifying investors and the media about conference calls through
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
REGULATION FAIR DISCLOSURE
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.