Regulation Fair Disclosure (Reg FD)
An SEC rule that prohibits public companies from selectively disclosing material nonpublic information to certain investors without simultaneously disclosing it to the general public.
What is Reg FD?
Regulation Fair Disclosure (Reg FD), adopted by the SEC in August 2000, requires that when a public company intentionally discloses material nonpublic information to securities market professionals (analysts, hedge funds, institutional investors), it must simultaneously make that information available to the general public. If the selective disclosure is unintentional, the company must make public disclosure promptly — generally within 24 hours. Material information is anything a reasonable investor would consider important in making an investment decision: quarterly earnings estimates, merger discussions, major contract wins, or significant product delays. Public disclosure is typically made through an SEC filing (Form 8-K), a press release, or a broadly accessible conference call. Reg FD leveled the informational playing field between institutional and retail investors, effectively ending the practice of companies briefing favored analysts before public announcements. Violations can result in SEC enforcement, injunctions, and civil penalties.
Example
Before Reg FD, a company's CFO might call a Goldman Sachs analyst to warn that quarterly earnings would miss estimates — giving Goldman's clients time to sell before the public announcement caused the stock to drop. Reg FD made this practice illegal. Today, if a CFO inadvertently reveals material information to an analyst during a private call, the company must issue a public disclosure (Form 8-K or press release) within 24 hours or by market open the next trading day.
Source: SEC — Regulation FD