(August 4) – “Despite an outpouring of support from individual investors and consumer groups, federal securities regulators are still scrambling to revise a proposed rule against selective disclosure of corporate information before it comes up for a vote next week.”
“The Securities and Exchange Commission is scheduled to vote next Thursday on the new rule, intended to prevent corporate officials from sharing important information only with limited groups of big investors or Wall Street analysts.”
“People close to the commission said they expected the rule, a pet project of Arthur Levitt, the chairman of the commission, to be passed over the vocal opposition of investment banks and brokerage firms,” Patrick McGeehan writes in today’s New York Times.
“Mr. Levitt has repeatedly said that by ‘feeding’ information to analysts before the rest of the investing public, some corporations have put ‘a stain on our markets’. Two of the three other commissioners have expressed concerns about particular aspects of the proposed rule. Three commissioners must agree for a rule to be adopted.”
“To ensure passage, these people said, the commission is rewriting the rule to make clear that senior executives will not be punished for sharing information with reporters and bond-rating agencies and that lower-level employees will remain as free as they are now to talk to people outside their companies. The commission also is making changes to protect executives from civil lawsuits over public disclosures of corporate information.”