SEC TAKING CLOSE LOOK AT REGULATIONS

By: Todd Shields 'Fair Disclosure' Of Financial Info Remains Issue



WASHINGTON - It's an unsavory but all-too-common practice: A
company divulges information to a narrow circle of stock analysts who
use the knowledge for profit, with the public left out in the cold.



Federal officials want it to stop. But some journalists fear a
regulatory bid to stanch insider whispering could end the give-and-take
of daily business reporting - or, perversely, give companies new
opportunities to hide information in plain sight amid the millions of
pages available on the Web.



The discussion points up the increased sensitivity surrounding
information in an era of high-volume, hair-trigger stock trading.
Investing, a game once played mainly in brokerage houses, now involves
millions of citizens who closely follow business - and who move
markets when news surfaces.



In such an environment, so-called selective disclosure has become a
target of federal ire. Securities and Exchange Commission (SEC)
Chairman Arthur Levitt called the practice 'a stain on our markets.'



As a remedy, the SEC has proposed its Regulation FD, for fair
disclosure. The regulation - which still must be finalized -
says once companies tell somebody something, they must tell everybody.
For instance, a warning that earnings might fall short could not be
uttered solely in a conference call to a few analysts, but must be
spread as widely as possible.



Some fear the rule could end up limiting information. Among them is
Peter G. Skinner, executive vice president of Dow Jones & Co. Inc.,
publisher of The Wall Street Journal and Dow Jones Newswires.



In comments filed with the SEC, Skinner wrote that a business executive
could not answer a reporter's questions without subsequently convening
a news conference or issuing a press release to spread any information
divulged.



Businesses would stop talking to reporters, resulting in 'a devastating
impact on the financial news-gathering process,' Skinner wrote. He
suggested an exemption for news organizations.



Others think such worries are overblown. 'I don't think it's a matter
of concern for the press,' said Matthew Winkler, editor in chief of
Bloomberg News. 'The SEC isn't concerned with people talking to
reporters. It's concerned with people talking to people who have the
ability to benefit.' Winkler said business news sources would continue
to talk with reporters.



Other journalists focused concern on a provision that would let
companies forgo press releases if they divulge information on the
Internet or via a conference call open to many listeners.



It could be several months before the SEC decides the regulation's
final form.



SEC spokesman Chris Ullman indicated the commission is listening to
reporters' concerns. 'Ultimately,' Ullman said, 'our goal is to sustain
the important role that business journalists play.'



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Todd Shields (tshields@editorandpublisher.com) is the Washington editor
for Editor & Publisher magazine.














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