St. Mary's Law Journal


This Recent Development focuses on the potential effects Regulation Fair Disclosure (FD) will have on the participants in the American capital market and on the stock markets themselves. Congress and the Securities Exchange Commission (SEC) seek to achieve confidence in the integrity and fairness of the American stock market and protection of investors from fraud by promoting equal opportunities for investors. In order to maintain a competitive edge, vis-à-vis its foreign counterparts, the United States must continually refine its financial systems to maximize fairness and integrity. This Recent Development focuses on selective disclosure—allowing a limited segment of investors access to information about a company’s financial performance—along with the inability of existing securities regulations to prohibit such practices. The recently promulgated Regulation FD is a measure anticipated to reign in the disclosure of nonpublic information to a privileged few. Specific requirements within the Regulation FD are examined by the author, and the SEC intends for the Regulation FD to level the playing field for investors. Furthermore, this Recent Development addresses potential trouble areas caused by the regulation’s interplay with other securities rules and regulations. In addition to suggestions for compliance, the various touchstones of controversy such as the effects related to Regulation FD on the securities industry are also discussed. Regulation FD molds a remedy to the perceived evils of selective disclosure. Confidentiality agreements represent the SEC’s strategy for controlling selective disclosure, without expressly authorizing it. This Recent Development concludes with an assessment of the practical effects that Regulation FD will have on the securities industry and the likelihood that it is here to stay.


St. Mary's University School of Law