Fair Disclosure Carries Huge Price Tag

The costs of complying with Regulation FD, designed to end selective disclosure of market-moving information to investment professionals, are borne mostly by stock issuers and ranges from $250 million to $400 million, significantly higher than the SEC?s projected annual $34 million to $49.5 million per annum, the report notes.

The SIA, which opposed the rule prior to its October enactment, argues that although Regulation FD has led to increased investor confidence in the markets and has leveled the playing field for individual investors, uncertainty over the parameters and the potential application of the rule has hurt both the quantity and the quality of the information released.

While the association supports the SEC’s disclosure goals and is not seeking a repeal of the regulation, it is recommending some modifications and is seeking specific guidance on what constitutes significant or material information that companies must disclose universally, a major contributor to high corporate legal bills.

The report, based on both in-house and commissioned research as well as results from previous surveys was released Thursday to coincide with a House capital-markets subcommittee hearing on the rule.

– Camilla Klein  editors@plansponsor.com