Regulation FD: recent charges underscore the importance of compliance culture - .PDF file.
The Securities and Exchange Commission (SEC) last week issued a press release announcing it has charged a former investor relations officer at First Solar, Inc. with violating Regulation Fair Disclosure (Regulation FD). An SEC investigation determined that the IR officer alerted certain analysts and investors in one-on-one conversations about a significant business development that had not yet been publicly disclosed. Importantly, and in keeping with past practice under analogous circumstances, the SEC indicated in the press release that it determined not to bring an enforcement action against First Solar in connection with the misconduct based on several factors relating to the strength of the company’s compliance policies and procedures.
While recent SEC Regulation FD enforcement actions have focused a spotlight on the use by issuers of social media and other nontraditional means of communication to publicly disseminate information, selective disclosure to analysts and other members of the investment community through one-on-one conversations still remains an area of high risk. Issuers should take time to review and, if necessary, update their Regulation FD policies, procedures and training for officers authorised to communicate with analysts and investors.
While these measures may not stop a bad actor from intentionally or negligently violating the company’s policies and procedures, they may protect a company from civil and administrative SEC proceedings as well as the attendant reputational harm…
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