Combatting the “Whisper” Leveling the Playing Field

Combatting the “Whisper”Leveling the Playing Field

2001: A Lousy Year

Sarbanes-Oxley Act 2002● Public Company Accounting Oversight Board (PCAOB)

● Auditor Independence

● CEO and CFO Certification of Results

● Criminal Offenses for Fraud/Records Tampering

Breaking Up the Clubhouse• Buy Side: Major mutual funds (Fidelity,

Janus, Putnam etc.); public employee retirement systems; “Institutional Investors”

• Sell Side: Investment firms (JP Morgan, Morgan Stanley, Goldman Sachs); “Institutional Investors”

SEC Fair Disclosure• Regulation FD provides that when a

company discloses “material” nonpublic information to certain individuals or entities — such as stock analysts or shareholders — the company must make public disclosure of that information. In this way, the new rule aims to promote the full-and-fair disclosure.

• (Media Exempted)

Famous Mark Twain Quote

"Never pick a fight with people who buy ink by the barrel."

Reg FD Pressure PointsCEO and CFO

Corporate Public Relations

Investor Relations

Corporate Legal

Corporate Finance

News Media

What Are The World’s Most Dangerous Questions?

• “How’s Business?”

• Selective Disclosure?

• What is “Material?”

So What Is “Material?”

• Any information that would prompt an investor to buy, sell or hold a company’s stock.

• The SEC is on-guard for “selective disclosure of material information”

Steve Jobs Dies?

Amazon Announces New Kindle Reader?

Salesforce.com Announces a Four-for-One Stock Split

Nike to acquire Under Armour

Nordstrom Opens Full-Service Eugene, Oregon Store?

Nordstrom Opens Full-Service London, UK Store?

Deloitte & Touché LLP No Longer The Auditor for Starbucks

Did Apple benefit from (non)- disclosure of CEO Steve Jobs’ health problems?

Reg FD Violation?• Your publicly traded company reported four weeks

ago….

• The Eugene Register Guard calls and asks: “What is the company’s guidance for the present quarter?”

• You repeat what was contained in the quarterly release? (e.g. top line, bottom line, gross margin, cash)

• Did you just violate SEC regulations?