Murphy's Law

Tom Murphy

Pssst… hey fella want some insider information?

The perils of selective disclosure is something PR people at publicly listed companies have to deal with every day.

For the unititiated, the basic rules are that you cannot provide sensitive material information that may affect the company’s stock price to a select number of existing or potential investors. Instead, any material information must be openly disclosed to all investors at the same time, thereby providing all investors with an equal opportunity to act on that information.

In 2000, the Securities and Exchange Commission (SEC) implemented “Regulation FD” which provided formal remedies against any company choosing to selectively release sensitive information.

The Financial Times has a story that CRM software vendor Siebel Systems is the first company charge in Federal court for breaking Regulation FD rules. According to the story, four previous cases have been brought since 2000 but they were all settled out of court.

According to the SEC, Siebel’s CFO and the Director of Investor Relations had three days of private meetings with investment insitutions and at these meetings they told the potential investors that the company was performing better than was publicly expected. Also it appears that no one on the Siebel Investor Relations team was trained on Regulation FD.

Doh!

Footnote:

Thanks to Ranier PR’s blog for the link.

Written by Tom Murphy

July 1, 2004 at 9:03 am

Posted in General

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