LOS ANGELES, Dec. 28, 2000 (PRIMEZONE) -- Securities analysts and portfolio managers strongly dislike Regulation FD and believe it will hurt individual investors more than help them.
Those were among the findings of a survey conducted by Los Angeles investor relations firm Pondel/Wilkinson Group, which sought opinions about the much publicized Securities and Exchange Commission directive that became effective October 23.
Arguably the most talked about subject in the year 2000 among investor relations professionals and those involved with publicly traded companies, Regulation FD seeks to ensure that all investors have equal access to material, market moving information. It also spells out the tactical means by which public companies must comply, including prompt disclosure via widely distributed news releases and access to conference calls for everyone, among other measures.
The survey, conducted via e-mail, queried nearly 1,000 securities analysts and portfolio managers less than 60 days following the effective date of the new regulation, and just following the initial wave of third quarter earnings announcements and investor conference calls.
"It was less disclosure, not fair disclosure," said one respondent. "This regulation will actually end up hurting the individual investor because it will limit information. The net result will be companies spoon feeding investors the data they want to disclose, with the investors lacking the pertinent data they need."
"Regulation FD will damage managements' relationships with investors," said another respondent. "It will create an environment of less information and heightened volatility."
Eighty-eight percent of those responding to the survey believed that companies were less communicative during their third quarter conference calls. The same percentage characterized Regulation FD as "bad." More than 90 percent of those responding said the new regulation would make their jobs more challenging and would do nothing to help "level the playing field" for individual investors.
Despite the overwhelmingly negative commentary, 94 percent of those responding said they still want to meet individually with management. "There certainly may be a bit of self-serving remarks from the tenor of the responses," said Roger Pondel, president of Pondel/Wilkinson Group. "Nevertheless, the results underscore what we are finding to be the general opinion of the investment community professionals with whom we speak on a daily basis. In parallel, we are hearing essentially the same things from CEOs and CFOs.
"From our perspective as investor relations counselors, not much really changed since Regulation FD," said Pondel. "We always have advised public companies to widely cast their communications. Selective disclosure was never acceptable corporate behavior."
Pondel/Wilkinson Group, founded in 1968 and under present management since 1981, primarily serves middle market, publicly traded companies in varied industries, including technology and e-commerce, consumer products and services, and healthcare.