Understanding Regulation FD or Material Information disclosure:
Okay, this is a fairly complex issue, but I will do my best to explain it and then give you two links, one is the rule, and the other is an article that uses Apple CEO Steve Jobs being sick as an example.
Many people claim to know all about this, but have probably never actually read the rule. They just heard from a friend who has a friend that has a cousin who's brother said that they have a certain amount of time...... Oh the rumors that move penny stocks, gotta love'em.
Under the rule an issuer, or person associated with an issuer, who is going to release information to a securities analyst or a shareholder who might use that information to trade with must disclose to the public the same information at the same time via press release, conference call, website, even an offical corporate blog. If the information was given to an analyst or shareholder on accident or leaked, then the same information must be given to the public within 24 hours of an Officers knowledge of the leak.
Material Information is basically anything that could have a positive or negative effect on stock due to anything that could influence the companies operations, cash flow, and bottom line. The rule does give specific examples, such as a merger, but its not limited to those examples.
Technically speaking there is no time line for such a release of material information as long as it is not in the hands of selective people whom may trade based on their knowledge.
Most large companies will release material information rather quickly because it has a greater chance of someone leaking the information to a institutional trader or other shareholder.
Smaller companies can disclose as necessary if they can keep the information in the hands of employees who won't use the information to trade; such as having a confidentiality agreement in their contract.
Most importantly: Regulation FD will apply to all issuers with securities registered under Section 12 of the Exchange Act, and all issuers required to file reports under Section 15(d) of the Exchange Act, including closed-end investment companies, but not including other investment companies, foreign governments, or foreign private issuers.
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