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April 30, 2003

Survival After the Reg FD Earthquake: Three Years Later, Pros Learn How to Cope

By Nina Mehta

"The intent of Reg FD is good but that doesn't mean issuers, particularly the less informed ones, aren't at times overly cautious or shutting down completely," said Bear Stearns's Pacheco. "Some companies seem to be so afraid [of violating Reg FD] that they're not sharing any information unless they can do so in a public forum."

"Management has been cutting back on information that's not in a press release or in the K or Q," said Case of Southwest Securities.

Enforcement Actions

Last November the SEC finally announced its first four Regulation FD enforcement actions, against Raytheon Co., Secure Computing Corp., Siebel Systems and Motorola. The first three were issued "cease and desist orders." Motorola got off with a wrist slap because it had followed the advice of counsel.

"These cases served as wake-up calls," said attorney Miller. "Reg FD is something the SEC is taking seriously, and public companies know they're vulnerable to charges if they don't comply."

But even many of the critics have learned to live with Reg FD. That's because the four cases, according to legal experts, provided some guidance on what exactly the safe harbor might be.