Other kinds of communications, including company contact with journalists and securities-ratings firms, such as Moody's Investors Service Inc., also are exempt. We're pleased with the result. Nearly all regulations have been approved unanimously during Mr. Levitt's tenure of more than seven years. Mr. Levitt said several revisions were made to satisfy concerns of Commissioner Isaac Hunt, who agreed to support the measure only in the past several days. For instance, the final draft makes it clear that violating the disclosure rules isn't considered fraud.
Violations are punishable with injunctions and fines.
The regulation also insulates companies from private lawsuits arising from violations of the new rule. By making failure to comply with the rule a disclosure violation, the SEC gets around its historical problem in fighting selective disclosure. In a handful of unsuccessful enforcement cases, the SEC tried to prove selective disclosure was a fraud violation. One celebrated decade-long case went to the Supreme Court, which ruled against the SEC in 1983. SEC officials said the disclosure requirement was never intended to apply to communication between executives and journalists, and that the final rule clarifies the issue.