Thus, only the employee, individually, could be held liable, not the issuer, even if the issuer encouraged the disclosure. In addition, Reg FD does not require issuers to disclose all material information. Rather, the proposal requires that when the issuer chooses to disclose such material information, it do so publicly. Materiality is a concept that pervades most, if not all, areas of securities law. We agree with the Commission that materiality judgments cannot always be readily determined.
Materiality is a facts and circumstances determination.
In addition, the proposal provides an issuer the ability to take corrective action for unintentional selective disclosures. Thus, Reg FD does not apply to communications among an issuer's employees, but only to communications of material nonpublic information to outsiders such as certain investors and outside analysts. We recognize the need for having issuers communicate with certain individuals such as attorneys, outside consultants and accountants, especially in light of the due diligence that is necessary to prepare required filings under the Commission's rules and for public offerings and merger situations. However, to avoid nullifying the intent of this proposal, we support, at a minimum, that sharing of material nonpublic information under such circumstances be permitted only if disclosed pursuant to a written agreement. If an inappropriate selective disclosure has been made by an issuer, the proposal draws a distinction between how the disclosure occurred and what appropriate follow up public disclosure must occur.