Yes. In assessing the materiality of an
issuer's confirmation of its own forecast, the issuer should consider whether the confirmation conveys any information above and beyond the original forecast and whether that additional information is itself
material. That may depend on, among other things, the amount of time that has elapsed between the original forecast and the confirmation (or the amount of time elapsed since the last public confirmation, if
applicable). For example, a confirmation of expected quarterly earnings made near the end of a quarter might convey information about how the issuer actually performed. In that respect, the inference a
reasonable investor may draw from such a confirmation may differ significantly from the inference he or she may have drawn from the original forecast early in the quarter. The materiality of a confirmation
also may depend on, among other things, intervening events. For example, if it is clear that the issuer's forecast is highly dependent on a particular customer and the customer subsequently announces that it
is ceasing operations, a confirmation by the issuer of a prior forecast may be material.
We note that a statement by an issuer that it has "not changed," or that it is "still comfortable
with," a prior forecast is no different than a confirmation of a prior forecast. Moreover, under certain circumstances, an issuer's reference to a prior forecast may imply that the issuer is confirming
the forecast. If, when asked about a prior forecast, the issuer does not want to confirm it, the issuer may simply wish to say "no comment." If an issuer wishes to refer back to the prior estimate
without implicitly confirming it, the issuer should make clear that the prior estimate was as of the date it was given and is not being updated as of the time of the subsequent statement.
Does Regulation FD create a duty to update?
No. Regulation FD does not change existing law with respect to any duty to update.
If an issuer wants to make public disclosure of material nonpublic
information under Regulation FD by means of a conference call, what information must the issuer provide in the notice and how far in advance should notice be given?
An adequate advance notice under
Regulation FD must include the date, time, and call-in information for the conference call.
Issuers also should consider the following non-exclusive factors in determining what constitutes adequate
advance notice of a conference call:
Public notice should be provided a reasonable period of time ahead of the conference call. For example, for a quarterly earnings announcement that the issuer makes on a regular basis, notice of several days would be reasonable. We recognize, however, that the period of notice may be shorter when unexpected events occur and the information is critical or time sensitive.
If a transcript or re-play of the conference call will be available after it has occurred, for instance via the issuer's website, we encourage issuers to indicate in the notice how, and for how long, such a record will be available to the public.
Can an issuer satisfy Regulation FD's public disclosure requirement by disclosing material nonpublic information at a shareholder meeting that is open to all shareholders, but not to the
No. If a shareholder meeting is not accessible by the public, an issuer's selective disclosure of material nonpublic information at the meeting would not satisfy Regulation FD's public
Could an Exchange Act filing other than a Form 8-K, such as a Form 10-Q or proxy statement, constitute public disclosure?
Yes. In general, including information in a
document publicly filed on EDGAR with the SEC within the time frames that Regulation FD requires would satisfy the rule. In considering whether that disclosure is sufficient, however, companies must take
care to bring the disclosure to the attention of readers of the document, must not bury the information, and must not make the disclosure in a piecemeal fashion throughout the filing.
For purposes of
Regulation FD, must an issuer wait some period of time after making a filing or furnishing a report on EDGAR that complies with the Exchange Act before making disclosure of the same information to a select
Prior to making disclosure to a select audience, the issuer need only confirm that the filing or furnished report has received a filing date (as determined in accordance with Rules 12 and 13
of Regulation S-T) that is no later than the date of the selective disclosure.
Can an issuer ever review and comment on an analyst's model privately without triggering Regulation FD's disclosure
Yes. It depends on whether, in so doing, the issuer communicates material nonpublic information. For example, an issuer ordinarily would not be conveying material nonpublic information
if it corrected historical facts that were a matter of public record. An issuer also would not be conveying such information if it shared seemingly inconsequential data which, pieced together with public
information by a skilled analyst with knowledge of the issuer and the industry, helps form a mosaic that reveals material nonpublic information. It would not violate Regulation FD to reveal this type of data
even if, when added to the analyst's own fund of knowledge, it is used to construct his or her ultimate judgments about the issuer. An issuer may not, however, use the discussion of an analyst's model as a
vehicle for selectively communicating – either expressly or in code – material nonpublic information.
During a nonpublic meeting with analysts, an issuer's CEO provides material nonpublic information
on a subject she had not planned to cover. Although the CEO had not planned to disclose this information when she entered the meeting, after hearing the direction of the discussion, she decided to provide
it, knowing that the information was material and nonpublic. Would this be considered an intentional disclosure that violated Regulation FD because no simultaneous public disclosure was made?
disclosure is "intentional" under Regulation FD when the person making it either knows, or is reckless in not knowing, that the information he or she is communicating is both material and
nonpublic. In this example, the CEO knew that the information was material and nonpublic, so the disclosure was "intentional" under Regulation FD, even though she did not originally plan to make
May an issuer provide material nonpublic information to analysts as long as the analysts expressly agree to maintain confidentiality until the information is public?
If an issuer
gets an agreement to maintain material nonpublic information in confidence, must it also get the additional statement that the recipient agrees not to trade on the information in order to rely on the
exclusion in Rule 100(b)(2)(ii) of Regulation FD?
No. An express agreement to maintain the information in confidence is sufficient. If a recipient of material nonpublic information subject to such a
confidentiality agreement trades or advises others to trade, he or she could face insider trading liability.
If an issuer wishes to rely on the confidentiality agreement exclusion of Regulation FD, is
it sufficient to get an acknowledgment that the recipient of the material nonpublic information will not use the information in violation of the federal securities laws?
No. The recipient must expressly agree to keep the information confidential.
Must road show materials in connection with a registered public offering be disclosed under Regulation FD?
disclosure made "in connection with" a registered public offering of the type excluded from Regulation FD is not subject to Regulation FD. That includes road shows in those offerings. All other
road shows are subject to Regulation FD in the absence of another applicable exclusion from Regulation FD. For example, a disclosure in a road show in an unregistered offering is subject to Regulation FD.
Also, a disclosure in a road show made while the issuer is not in registration and is not otherwise engaged in a securities offering is subject to Regulation FD. If, however, those who receive road show
information expressly agree to keep the material nonpublic information confidential, disclosure to them is not subject to Regulation FD.
Can an issuer disclose material nonpublic information to its
employees (who may also be shareholders) without making public disclosure of the information?
Yes. Rule 100(b)(1) states that Regulation FD applies to disclosures made to "any person outside the
issuer." Regulation FD does not apply to communications of confidential information to employees of the issuer. An issuer's officers, directors, and other employees are subject to duties of trust and
confidence and face insider trading liability if they trade or tip.
If an issuer has a policy that limits which senior officials are authorized to speak to persons enumerated in Rule 100(b)(1)(i) –
(b)(1)(iv), will disclosures by senior officials not authorized to speak under the policy be subject to Regulation FD?
No. Selective disclosures of material nonpublic information by senior officials
not authorized to speak to enumerated persons are made in breach of a duty of trust or confidence to the issuer and are not covered by Regulation FD. Such disclosures may, however, trigger liability under
existing insider trading law.
A publicly traded company has decided to conduct a private placement of shares and then subsequently register the resale by those shareholders on a Form S-3 registration
statement. The company and its investment bankers conduct mini-road shows over a three-day period during the private placement. Does the resale registration statement filed after completion of the private
placement affect whether disclosure at the road shows is covered by Regulation FD?
No. The road shows are made in connection with an offering by the issuer that is not registered (i.e., the private
placement), regardless of whether a registration statement is later filed for an offering by those who purchased in the private placement.