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SEC Indicates How Companies May Avoid Regulation FD Enforcement Proceedings |
October 26, 2009
Previously published on October 2009
Regulation FD generally requires public companies to publicly disclose material nonpublic information that has been selectively disclosed to members of the investment community. The SEC indicated in a recent SEC litigation release that a company may avoid an SEC enforcement proceeding for a Regulation FD violation by a key employee, even when the SEC commences a proceeding against the employee responsible for the violation. According to the release, key factors for the SEC in deciding whether to name the company in its complaint include whether the company: (1) has a culture of compliance, including Regulation FD controls and procedures and training sessions with counsel; (2) promptly reports the leaked information to the public on an 8-K report; (3) promptly reports the Regulation FD violation itself to the SEC; and (4) reviews its procedures after the violation has occurred and revises them as necessary. The release should serve as a reminder for companies to review their Regulation FD procedures to increase the likelihood that a Regulation FD violation by an officer or employee will not result in an enforcement proceeding against the company.
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The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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