from the EDITOR.

• Author: Marshall, Jeffrey
• Position: Brief Article

Given the almost-instantaneous way that financial information can buffet a company's stock these days, it's hardly surprising that disclosure has become a contentious issue. SEC Chairman Arthur Levitt and many small investors had come to believe that leading analysts and mutual fund managers had developed an edge in wringing material information Out of companies -- information they then used to their advantage.

Hence Regulation FD, for fair disclosure. The rule, implemented in late October, is too new at this writing to grade fairly, and companies of all sizes have been laboring for months to understand it and accommodate themselves to it. Writer Gregory Millman's cover story reflects some of the uneasiness and uncertainty it has fostered in corporate America. When a sizable number of CFOs he approached declined to talk about the rule, it was clear that the subject itself was uncomfortable.

FEI has generally supported the regulation, though FEI has questioned some of its provisions -- like the 24-hour limit for broadly releasing information that had inadvertently been aired. Indeed, it's hard to argue against the rule's governing principle -- that market-moving information knows no hierarchies and no favorites. And, as Millman reports, the SEC had identified some serious abuses that did cry out for reform.

Still, there's no question that in the real world, it's hard to stop taking calls from analysts whom a CFO may have been talking to ad hoc for years. The analyst community is up in arms over the rule, but it appears that for them, the battle has been lost. As for Levitt, this ruling and a subsequent one on auditor independence...