What is Regulation Fair Disclosure (FD)?

Regulation Fair Disclosure or Reg FD is a regulation passed by the Securities and Exchange Commission (SEC) of United States for addressing the issue of selective disclosure of information by publicly traded companies and other issuers. 

The rule passed in August 2000, makes it mandatory for all the publicly-traded companies and issuers of stocks to disclose information about them or their stocks publicly if they intend to disclose that information to a limited group of individuals. That means, if the company wants to share any information about themselves or their stocks with market professionals or certain groups of shareholders, and the information is not already publicly available, they must disclose the information in public simultaneously. 

If any such information was unintentionally made public, the issuer must act promptly to disclose it in public.

What does Regulation FD Require? 

Reg FD aims to ensure full and fair disclosure of information to all. Previously, it was a common practice for many of the companies to disclose information selectively to some investors (usually large institutional investors). The institutional investors could use that market-moving information for trading their securities. Important information was often disclosed in the meetings and conference calls only to the selected investors and perhaps to the analysts. The practice was discriminatory for the general public and small or individual shareholders. 

The Reg FD is an anti-discriminatory measure taken by the Securities and Exchange Commission to ensure everyone gets to know all the information disclosed by an issuer of securities. Regulation Fair Disclosure doesn't apply to all the communications between an issuer and a shareholder. It is applied to those interactions which are likely to influence the shareholders' trading activity. The rule also applies to all the communications with market professionals and analysts. The senior officials of the issuing company and all other staff engaged in regular communication with the stocks holders and security market professionals are obliged to abide by this regulation. 

Publicly-traded companies often conduct earning and forecast calls to communicate with the market professionals and update them about the plans and developments. The recordings of those calls must be made available in public after the session ends. The issuer also needs issue press releases simultaneously with the same information. The company may also share the information publicly by filing Form 8-K with the Securities and Exchange Commission.