If they don't have enough information to make accurate judgments about a firm, shareholders may have grounds for legal action against the company when there are big differences between anticipated and real performance. That tension pushes companies to disclose more, and that increases risk and liability to companies. Companies can't be sued for violations of Regulation FD itself, but they can under a companion regulation against insider trading, Rule 10b5. That two-part rule clamps down on traders' use of important nonpublic information as well as company insiders' sharing confidences with people, including family members, who might use that information to trade stock. Shareholder complaints and suspicious behavior by companies, as when a stock becomes especially active up or down and its company issues an announcement soon after, can tip the SEC to disclosure violations.
Punishment includes suspension from trading, delisting or a fine.
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