Question: Does Early Access to PR Wire Info Implicate Reg FD?

The issue below presents an interesting Reg FD question and may be a great way to launch the new Comments feature on Securities Docket.

As discussed here and in more detail in a prior post on my Enforcement Action blog, a recent article by IR Web Report (click here) states that

leading PR wire services used for corporate disclosure do not deliver information simultaneously to all investors, and that “some investors, mostly professionals with access to expensive subscription services, are trading in extended hours on information they receive from companies up to several minutes ahead of most other investors who rely on public sources of information, such as company websites or popular investment websites like Yahoo! Finance.”

I reached out to the SEC to get its take on the significance and implications of non-simultaneous corporate disclosures going out over PR wire services.  SEC spokesman John Nester declined to discuss the facts set forth in the IR Web Report specifically, but stated that

Regulation FD requires that when a company discloses material non-public information to one of the enumerated persons, it must simultaneously either file a Form 8-K or use an alternate means of public disclosure that is dissemination of the information through a method or methods of disclosure that is reasonably designed to provide broad non-exclusionary distribution of the information to the public.

Read into that what you want.  My sense, however, is that at the SEC does not consider the scenario laid out in the IR Web Report article to be a violation of Reg FD.

What do you think?  Please offer your opinion in the Comments section below.

2 Comments

  • bob
    Posted November 21, 2008, 11:05 am 11:05 am 0Likes

    Isn’t the IR Web scenario exclusionary?

  • Dominic Jones
    Posted November 21, 2008, 1:49 pm 1:49 pm 0Likes

    I’m not a securities lawyer, but I do understand fair and unfair. I can’t believe that the SEC would consider it simultaneous and non-exclusionary for some investors to get market moving information one to four minutes ahead of others.

    But more important to me is that issuers and organizations like the National Investor Relations Institute, representing thousands of companies, now know about this issue (they most probably did not know before) and have it in their power to easily fix the problem, but have so far chosen to say nothing. This can only lead people to wonder what benefit there is to management to have this uneven playing field persist.

    While I think people in the investor relations industry should question the very close relationship that has developed between the profession’s institutions and the PR wire services, I don’t think this is an issue they can blame on the PR wires. The PR wires cannot easily fix the problem of uneven access because it is beyond their control.

    All investors simply need to know is that if they really want company earnings news the second it becomes available to others via a PR wire, they just need to go to a company’s website. However, if they do that now, they commonly will be among the last to know.

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