Friday, September 01, 2006 3:26:51 PM
>>>
BOT...if the next PR is deferred until the week after Labor Day
How does one defer a material event? My interpretation of events pending for PPHM
translates to they don't have a green light to proceed on any of the pending potential
developments you reference.
>>>
I've found this article by a Harvard law professor to be very helpful.....
and it perhaps brings light to our managements reluctance to do much open market
stock purchases given concerns about "disclose or abstain".
http://www.leda.law.harvard.edu/leda/data/531/Heinonen.rtf
There are basically two different sets of rules relating to the disclosure of information
by a public company . Firstly, public companies have to release certain information
periodically irrespective of whether any material events or developments have taken place.
The information is to be released annually in connection with the publishing of the annual
report (in Form 10-K – format) and quarterly, when announcing the results from the previous
quarter ended (in Form 10-Q – format). Secondly, certain material events or developments
need to be published at the time they occur or immediately thereafter or, alternatively,
the company and its insiders must abstain from dealing with the securities issued by the
company. This “disclose or abstain” rule thus enables the companies to withhold material
information from markets for significant periods of time (even months) subject to the
prohibition on the company and its officers trading with the securities in question.
There is some uncertainty as to what information is considered significant enough to fulfill
the materiality threshold i.e. which information should be disclosed in connection with
the periodic reporting and which information gives rise to a duty to abstain from trading
if that information is not disclosed. The investor’s investment decisions should be based
on accurate and timely distributed information, but not all information relating to the
corporation is deemed important enough to affect the valuation of the securities of a
company.
<<And he continues>>
As a general rule, all such information that is deemed to affect the price of the shares
should, at some point, be released to the markets. On the other hand, “a corporation is
not required to disclose a fact merely because a reasonable investor would very much like
to know that fact. Rather, an omission is actionable under the securities laws only when
the corporation is subject to a duty to disclose the omitted fact” . At least four different
kind of scenarios, where the company (issuer of the securities) must disclose all material
information, may be identified: i) when the company or the insiders are selling the
securities of the company (offering), ii) when the company is making periodic filings
(quarterly, yearly), iii) when proxy statements are disclosed and iv) when a previously
announced information must be corrected (or updated) . What, then, is the information
material enough to affect the valuation and therefore putting the company under the obligation
to disclose? When is the information deemed to have reached a level of certainty (for example
relating to drug development process) making it ripe enough to be released?
<<<And>>>
... the plaintiff’s argument reads as if firms have an absolute duty to disclose all information
material to stock prices as soon as news comes into their possession. Yet that is not the way
the securities laws work. We do not have a system of continuous disclosure. Instead firms are
entitled to keep silent (about good news as well as bad news) unless positive law creates a
duty to disclose…. The [Securities Act of] 1933 requires firms to reveal information only
when they issue securities, and the duty is owed only to persons who buy from their issuer
or an underwriter distributing on its behalf; every other transaction is exempt…Section 13
of the Securities Exchange Act of 1934…adds that the SEC may require issuers to file annual
and other periodic reports – with the emphasis on periodic rather than continuous. Section 13
and the implementing regulations contemplate that these reports will be snapshots of the
corporation’s status on or near the filing date, with updates due not when something “material”
happens, but on the next prescribed filing date….
Sorry for the PLish length of this post
cmos
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