Industry group blasts SEC on proposed rule change

NEW YORK: Heating up an already hotly contested issue, the Securities Industry Association (SIA) has blasted the Securities and Exchange Commission’s proposed rule changes on selective disclosure.

NEW YORK: Heating up an already hotly contested issue, the Securities Industry Association (SIA) has blasted the Securities and Exchange Commission’s proposed rule changes on selective disclosure.

NEW YORK: Heating up an already hotly contested issue, the

Securities Industry Association (SIA) has blasted the Securities and

Exchange Commission’s proposed rule changes on selective disclosure.



The SIA’s complaints were aired in a 20-page document recently submitted

to the SEC.



’Regulation FD (the formal name of the proposal) ... will constrict the

flow of information and will thereby impair the operation of the

marketplace as a reflector of value,’ the document stated. ’The

Commission is imposing ... onerous and intrusive guidelines, all because

of a relatively few - but highly publicized - misguided incidents, some

of which on investigation may have proved to have been entirely

innocent.’



The SEC began soliciting comments on Regulation FD after introducing it

last fall, and chairman Arthur Levitt has made it clear that the issue

is a top priority for him. Spokesman John Heine said SEC policy

prohibits him from discussing submitted comments.



The SEC recently extended the comment period, scheduled to end March 28,

through April 28 (PRWeek, March 27). Although the decision was made

after the SIA and the American Bar Association requested an extension,

Heine would not say whether or not pressure from the two groups spurred

the move.



While the SIA may not be thrilled with the proposal, virtually all of

the comments posted on the SEC’s Web site favor the change. The majority

of these comments are from individual investors who have traditionally

been denied access to the analyst community enjoyed by larger

institutional investors.



’As an officer of a publicly traded company, I applaud the efforts of

the commission to clearly define rules regulating such disclosure,’

wrote Concorde Career Colleges CFO Paul Gardner. ’By instituting such

regulations, I doubt that there will be less information available.’



This is not the first time that the SIA has come out publicly against

the proposal. In a press release last December, SIA general counsel and

SVP Stuart Kaswell said, ’Our principal concern centers on the chilling

effect that may result from the SEC’s more stringent regulations on what

companies can tell the financial analysts who cover them for the clients

of other firms.’



The SIA suggested the SEC consider alternatives, including adopting some

of the recommendations the National Investor Relations Institute

published in its Standards of Practice for Investor Relations (April

1998) or stepping up enforcement of existing regulations.



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