Selective disclosure
Encyclopedia
Selective disclosure is a situation when a publicly traded company discloses material information to a single person, or a limited group of people or investors, as opposed to disclosing the information to all investors at the same time.
Material information is roughly defined as information that would cause a reasonable investor to make a buy or sell decision.
A problem with selective disclosure that the U.S. Securities and Exchange Commission (SEC) sought to eliminate with Regulation Fair Disclosure
(a.k.a Regulation FD or Reg FD), is that it creates an uneven playing field for investors, allowing some investors to profit from material market moving information
before others.
Possible example of selective disclosure:
1. A company insider tells a small group of Wall Street analysts that the company is going to beat current analyst consensus estimates for earnings per share. If this is the first time the company disclosed such guidance, and the guidance wasn't simultaneously disseminated to all investors via a press release or publicized webcast, then the disclosure would consistitute selective disclosure.
Material information is roughly defined as information that would cause a reasonable investor to make a buy or sell decision.
A problem with selective disclosure that the U.S. Securities and Exchange Commission (SEC) sought to eliminate with Regulation Fair Disclosure
Regulation Fair Disclosure
Regulation Fair Disclosure, also commonly referred to as Regulation FD or Reg FD, is a regulation that was promulgated by the U.S. Securities and Exchange Commission in August 2000...
(a.k.a Regulation FD or Reg FD), is that it creates an uneven playing field for investors, allowing some investors to profit from material market moving information
Market moving information
A term used in stock market investing. Defined as information that would cause any reasonable investor to make a buy or sell decision.When a public company insider fails to publicly disclose material, market moving information, that is called selective disclosure, an act that is prohibited by the...
before others.
Possible example of selective disclosure:
1. A company insider tells a small group of Wall Street analysts that the company is going to beat current analyst consensus estimates for earnings per share. If this is the first time the company disclosed such guidance, and the guidance wasn't simultaneously disseminated to all investors via a press release or publicized webcast, then the disclosure would consistitute selective disclosure.