Regulation Fair Disclosure

A rule, approved by the Securities and Exchange Commission in August 2000, that prohibits companies from making a selective disclosure of market-moving news to favored analysts or other prominent people. The rule puts individuals who aren’t in the loop on a more even playing field with insiders, and was passed under the tenure of former SEC Chairman Arthur Levitt. More than two years later, the first violations were announced when the SEC issued cease-and-desist orders in civil administrative proceedings. Companies that received the orders were Raytheon Co. and its CFO Franklyn A. Caine; Secure Computing Corp. and its Chief Executive John McNulty; and Siebel Systems Inc. The SEC also announced a new type of violation, a report of investigation concerning Motorola Inc. and its management, for engaging in a series of individual conversations with analysts and giving them information that wasn’t previously made public. Because management relied on the advice of lawyers, which later turned out to be incorrect, it received a lesser admonishment and not an enforcement action.