Disclosure policy

There are a number of ways to mitigate the risk that there will be a material non-public disclosure of information that will violate the SEC’s Regulation Fair Disclosure. Most of the following possibilities require either the adoption of policies and procedures that govern the release of information, or the active participation of the investor relations staff. Compliance best practices include:

  • Quiet period. Mandate that there will be no communications with the investment community from the period when the company’s results become reasonably apparent, until quarterly earnings are released in the Form 10-Q or the annual results in the Form 10-K. The quiet period could be quite long when annual results are being released, since the company must wait for the outside auditors to complete their audit of its financial records.

  • Post everything. The company could make a standard practice of posting all of its presentations to the investor relations section of its website. At a minimum, this would mean posting the presentation PowerPoint slides and any written script that goes along with it. However, since a presenter could depart from the script, an even better approach is to make a video recording of every presentation and the following question-and-answer sessions, and make these videos available on the website. This latter approach ensures that all presenter commentary is made available to the investment community.

  • Standard forbidden topics list. If there are some aspects of the company that should only be discussed with outsiders by a few well-trained individuals, make sure that all other employees know they are prohibited from discussing those topics.

  • Impose employee non-disclosure agreements. Wherever possible, have employees sign a non-disclosure agreement, in which are stated a number of topics which they are not allowed to discuss with outsiders.

  • Most meetings handled by IRO. Have the investor relations officer be solely responsible for the bulk of all presentations to the investor community. Centralizing communications with the one person most knowledgeable about current disclosures makes it less likely that non-public information will be released. This also means that most employees are specifically not cleared to speak with analysts and investors.

  • Scripting. Meet with every employee who is about to talk to an analyst or investor, and talk about what the person is allowed to say, based on the information the company has already released to the public. This can (and should) include assisting employees with the construction of their presentations by reviewing preliminary speech drafts and observing dress rehearsals of speeches.

  • Debriefing. Once an employee has met with an analyst or investor, debrief him to see if there has been any unintentional disclosure of non-public information.

Related Courses

Investor Relations Guidebook 
Public Company Accounting and Finance