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
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
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
’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.