Page H01 Last October a new Securities and Exchange Commission regulation took effect requiring publicly traded companies to announce important information to the world, rather than just to a select group of big-time analysts. Many leaders of the securities industry, who had opposed Regulation FD and still do, predicted the worst. They argued, in part, that impulsive individual investors, stripped of the guidance provided by thoughtful analysts, would behave even more impulsively when suddenly confronted with raw data. They said companies would provide less, not more, information for fear of violating the regulation, that market volatility would soar and that the sky would fall. Surveys assessing the impact of Regulation FD are now trickling in.
Some companies say they are dispensing more information, some less.
The analyst and professional investor community, on the other hand, believes Regulation FD is a disaster. Before going further, I should declare my own bias. While I never thought Regulation FD would be of great assistance to most individual investors, I favored it on fairness grounds and so wrote. There is certainly no justification for government-sanctioned selective disclosure. The latest poll comes from PricewaterhouseCoopers, which surveyed 164 publicly traded companies about the impact of the regulation.